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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ---------------------

                                   FORM 10-K

                             ---------------------

        Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  For the Fiscal Year Ended December 31, 2000

                         ------------------------------

                          Commission File No. 0-31295

                           O2WIRELESS SOLUTIONS, INC.
                             A Georgia Corporation
                  (IRS Employer Identification No. 58-2467466)
                          440 Interstate North Parkway
                             Atlanta, Georgia 30339
                                 (770) 763-5620

                Securities Registered Pursuant to Section 12(b)
                    of the Securities Exchange Act of 1934:

                                      None

                Securities Registered Pursuant to Section 12(g)
                    of the Securities Exchange Act of 1934:

                        Common Stock, $0.0001 par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.      Yes  [X]      No  [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]

The aggregate market value of the common stock of the registrant held by
nonaffiliates of the registrant (10,519,837 shares) on March 15, 2001 was
approximately $19,067,205 based on the closing price of the registrant's common
stock as reported on the Nasdaq National Market on March 15, 2001. For the
purposes of this response, officers, directors and holders of 5% or more of the
registrant's common stock are considered the affiliates of the registrant at
that date.

The number of shares outstanding of the registrant's common stock, as of March
15, 2001: 27,735,848 shares of $.0001 par value common stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement to be delivered to
shareholders in connection with the 2001 Annual Meeting of Shareholders
scheduled to be held on May 24, 2001 are incorporated by reference in response
to Part III of this Report with the exception of information regarding
executive officers required under Item 10 of Part III, which information is
included in Part I, Item 1.


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                                     PART I

             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

         This report contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements regarding our expected financial position
and operating results, our business strategy and our financing plans are
forward-looking statements. These statements can sometimes be identified by our
use of forward-looking words such as "may," "will," "anticipate," "estimate,"
"expect," or "intend." Known and unknown risks, uncertainties and other factors
could cause our actual results to differ materially from those contemplated by
these statements. Such risks and uncertainties include, but are not limited to,
general economic conditions, competition in the wireless services industry, the
Company's ability to manage its growth effectively, the Company's ability to
implement its acquisition strategy, fluctuations in quarterly operating results
and other uncertainties detailed from time to time in the Company's Securities
and Exchange Commission filings. The section entitled "Risk Factors" in Item 1
of this Form 10-K, discusses some additional important factors that could cause
the Company's actual results to differ materially from those in such
forward-looking statements.

         Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. We are under no obligation to
update any of the forward-looking statements after the filing of this Form 10-K
to conform such statements to actual results or to changes in our expectations.

ITEM 1.  BUSINESS.

OVERVIEW

         We are a leading provider of outsourced integrated network solutions
for the global telecommunications industry. Our comprehensive end-to-end
solution enables us to address our customers' current and emerging network
infrastructure requirements. o2wireless plans, designs, deploys, maintains and
optimizes networks for wireless, wireless data, and broadband carriers.
o2wireless is technology and vendor independent; thus, we provide unbiased
evaluations and recommendations for our customers. We believe this gives our
customers a time-to-market advantage by allowing them to obtain their network
services from a single provider, helping satisfy their customers and compete
more effectively with their competitors.

         As telecommunication service providers enter new geographic and
product markets, they are packaging their services instead of offering them
separately. The telecommunications landscape is changing as a result of
consolidation and deregulation. To compete in this changing environment, many
telecom companies have consolidated to form highly integrated, geographically
dispersed companies. These providers are focusing on their increased range of
core competencies and are beginning to outsource a greater amount of their
network


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infrastructure needs. Consequently, the outsource network infrastructure
industry is transitioning from an industry of specialized service providers to
companies that offer single-source comprehensive solutions. With the
evolutionary build-out of network infrastructure in the wireless
telecommunications sector, as demonstrated by the multiple generations of
technology currently being implemented, we believe o2wireless is well
positioned to take advantage of the anticipated growth in the outsourced
network infrastructure industry.

         In 2000, we completed projects for more than 130 customers. Our
largest customers in 2000 included: wireless carriers, such as Verizon
Communications, Voicestream, Carolina PCS, Nextel and Sprint; equipment
vendors, such as Ericsson, Motorola, Lucent and Nortel Networks; tower
companies, such as Crown Castle; and broadband carriers, such as Adelphia
Business Solutions. In addition to performing work in the United States, since
1997, we have performed work in countries including Brazil, China, Germany,
Honduras, Israel, Japan, Jordan, Korea, Mexico, Nicaragua, Puerto Rico and
Russia. As of December 31, 2000, we had completed projects in all 50 U.S.
states and 35 countries.

INDUSTRY OVERVIEW

         The global telecommunications network infrastructure industry is
experiencing a number of trends that o2wireless believes will lead to a
significant increase in the demand for our services over the next several
years.

         Growth Of The Wireless Telecommunications Industry. According to
analyst research, wireless communications has been the fastest growing segment
of the telecommunications sector over the past seven years. We believe that
this growth has been driven in part by:

         -        Continuous global deregulation and privatization of the
                  telecommunications industry;

         -        Advances in wireless and wireline technologies;

         -        Increased availability and usage of wireless technologies;

         -        Future demand for broadband wireless applications, including
                  wireless internet and mobile commerce, or m-commerce;

         -        Convergence of technologies which has added complexity to the
                  telecommunications environment as carriers deploy networks
                  spanning traditional wireless/wireline boundaries to offer
                  enhanced services; and

         -        Replacement of fixed line telecommunications services with
                  wireless services.

         According to IDC, the number of worldwide subscribers is expected to
grow from over


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600 million in 2000 to 1.1 billion in 2003. Also, it is estimated that the
average minutes for wireless customers around the globe will increase from an
average of 200 minutes monthly to 550 minutes monthly by 2003. As wireless
services become more data-based than voice-based, data rates and transfer
bandwidth will become more important. In this new environment, there will be a
convergence of wireless and wireline technologies. As these two technologies
converge, we believe that full-turnkey network infrastructure service providers
who are able to offer this capability will gain a significant competitive
advantage in the marketplace.

         Increased Outsourcing of Infrastructure Needs. Telecommunications
carriers and manufacturers are changing their model for the delivery of network
infrastructure services. Presently, network infrastructure services are
generally provided by in-house labor; however, o2wireless believes the
telecommunications industry is shifting to an outsourced model. This is
evidenced by the fact that telecommunications carriers and manufacturers are
trending towards allocating resources to revenue-generating functions and away
from cost functions. Network pre-deployment, deployment, and maintenance
operations are a cost, not a revenue-generating function for telecom carriers
and manufacturers. There are many factors which are influencing
telecommunications carriers and manufacturers to consider outsourcing network
pre-deployment, deployment, and post-deployment functions. These include:

         -        Time-to-market advantage of outsourcing;

         -        Decreasing wireless prices;

         -        Subscriber growth;

         -        Strains on existing networks;

         -        Development of new wireless technologies including data; -
                  Need for network and site development;

         -        Increasing spectrum auction costs; and

         -        Development of the cellular tower industry.

         Industry Challenges. Customer turnover has been a challenge facing the
typical carrier in 2000. The reasons for this include higher use of prepaid
distribution channels, a migration from analog-to-digital technology and poor
network quality and coverage. Of these three factors, we believe poor network
quality creates the most turnover for carriers, and to make their business
models work, customer turnover must be kept to a minimum. We believe this
concern for wireless carriers will only create another avenue of growth for
network service providers.

         Increased Demand for End-to-End Solutions. Management believes the
size of the market for outsourcing network infrastructure services is
increasing. According to analyst estimates, the amount of pre-deployment,
deployment, and post-deployment support for wireless infrastructure represents
a $6.5-to-$15 billion market opportunity in 2001. These estimates are expected
to increase annually over the next five years. The wireless market is seeing
the continued progression to outsourcing services with the build-outs of PCS
networks, the transition from analog cellular networks to digital, and the
introduction of 2G, 2.5G and 3G services. In the United States alone, there are
expected to be at least 50,000 new 2G facilities added over the


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next 5 years. In Europe, the number of wireless towers for 2G applications is
anticipated to increase annually through 2004. As stated above, o2wireless
believes telecom carriers are turning to a comprehensive end-to-end solution
for their network infrastructure needs. By offering a complete end-to-end
solution, these providers are able to deliver a quality and reliable
infrastructure network on time. Telecom carriers are seeking out companies that
can build out large and complex networks rapidly with a high level of quality.
We believe a network infrastructure service provider that can rapidly mobilize
its capital equipment, financial assets and personnel will have a significant
competitive advantage.

         Competitive Strengths.

         -        Comprehensive Solution - o2wireless offers one of the most
                  comprehensive end-to-end solutions in our industry.

         -        Company Recognition - o2wireless has broadened its geographic
                  presence and is capable of servicing customers anywhere in
                  the world. We continue to expand internationally through a
                  combination of organic growth, targeted acquisitions, and
                  strategic partnerships. Our main focus internationally in
                  2001 will be Europe and we will consider other international
                  opportunities, but on an opportunistic basis only.

         -        Customer Satisfaction - Commitment to customer satisfaction
                  is our top priority and we believe in the philosophy that we
                  are only as good as our last project.

         -        Technical Expertise - o2wireless' technical and engineering
                  experience spans all major wireless and wireline
                  technologies, including wireless internet and emerging
                  broadband technologies. Our qualified professionals utilize
                  state-of-the-art tools to plan, design, engineer and deploy
                  even the most complex networks on time and within budget.

         -        Diverse Customer Base - o2wireless serves a diversified group
                  of customers including the largest wireless carriers,
                  equipment manufacturers and tower companies. This diversity
                  allows o2wireless to capitalize on the wide range of
                  technological advances and other market developments that
                  drive capital spending by customers.

         -        Customer Retention - We have long standing relationships with
                  many large, well-diversified customers. We expect to build on
                  these relationships and grow our customer base.

         -        Experienced Senior Management - o2wireless' strong management
                  team is comprised of individuals with extensive telecom and
                  wireless industry experience.

OUR GROWTH STRATEGY

            Our goal is to be the leading independent provider of integrated
end-to-end network services to the global telecommunications industry. Our
growth strategy includes the following elements:


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            Increasing Customer Base. We believe that our customers are seeking
integrated service providers to provide their network infrastructure service
needs. We are marketing our complete suite of service offerings to our existing
and potential customers, while focusing on increasing our range of service
offerings. We have and will continue to form strategic partnerships with
engineering firms, equipment manufacturers and other companies to offer our
customers the most complete turnkey network infrastructure services in the
industry.

         Strategic Acquisitions & Partnerships. We may make selected strategic
acquisitions and partnerships to augment our capabilities and geographic
coverage. We expect to target companies that:

         -        Specialize in network pre-deployment, deployment and network
                  maintenance services;

         -        Demonstrate strong organic revenue growth with growing
                  margins;

         -        Expand our domestic and global presence; and

         -        Enhance our existing network service capabilities.

            Process Refinement. As we expand, process refinement is vital to
our ability to deliver high quality solutions to our customers. We believe
processes must be driven by customer events; therefore, we are:

         -        Streamlining a new Customer Engagement Model;

         -        Enhancing our billing system; and

         -        Instituting and refining our program and project management
                  methodologies.

         Remain Current In All Wireless & Wireline Technologies. We are
investing to remain current in all major emerging wireless and wireline
technologies. We achieve this goal through continuing technical education and
equipment manufacturer certification programs.

         Attract, Develop, and Retain High-Quality Employees. We intend to
continue to attract qualified talent and retain high-quality employees by
offering interesting, challenging projects with the opportunity to work with
emerging technologies. We believe our commitment to employee skill development
fosters company loyalty and increases employee retention. We will continue to
motivate our employees through a broad employee stock ownership program and a
rewards system based on success.

             Leverage Prior Experience. By capturing data from prior
engagements in our software tools E-Site and Virtual Project Manager, we
leverage our prior experience and identify best practices. Further, we believe
our prior experience enables us to more accurately assess our staffing needs at
the beginning of a project and more efficiently utilize our resources. We
believe that the experience of our technical personnel and our proprietary
tools and processes provide our customers with significant benefits, including
critical time-to-market advantages.


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OUR SOLUTION

         We provide a wide range of comprehensive integrated services to the
global telecommunications industry that enable our customers to rapidly plan,
design, deploy and maintain their wireless telecommunications networks. Our
customers include wireless and wireline service providers, equipment
manufacturers and tower companies. We have expertise in the major wireless and
wireline telecommunications technologies and provide objective solutions to our
customers by remaining technology and vendor independent. Our project
management experience, along with our proprietary project management tools,
allows us to capitalize on our prior experience and to assist our customers in
deploying their networks more rapidly.

         Comprehensive Integrated Solutions. We provide a comprehensive service
offering, from pre-deployment planning through network installation,
maintenance and optimization. Our customers value our ability to span the full
range of services across wireless and wireline technologies, providing them
with a true end-to-end solution for their network infrastructure needs. Our
integrated service offering enables customers to rely upon a single party to
build and manage their entire telecommunications network. We provide network
management throughout each phase of the project; thus, enabling us to
efficiently meet schedules and manage resources in a timely and cost-effective
manner.

         Broad Telecommunications Expertise. A substantial portion of wireless
transmission signals are carried over wireline network facilities. We believe
this gives o2wireless an advantage in the marketplace because of our ability to
handle and optimize both wireless and wireline technologies. Our technological
expertise combined with our philosophy of providing a single source of
accountability gives our customers a time-to-market advantage while reducing
overall costs.

         Technology And Vendor Independence. By remaining technology and vendor
independent, o2wireless can provide unbiased evaluations and recommendations to
our customers. Telecom carriers are encountering increasing challenges in
maintaining complex networks and technologies. For example, the introduction of
wireless Internet technologies and the growth in broadband wireless services
requiring the transmission of large amounts of data has created new
technological hurdles for carriers establishing or upgrading their networks.
o2wireless' goal is to resolve all aspects of our customers network
infrastructure challenges. We strive to ensure that our customers networks are
optimized to meet their products, services, and customer needs.

         Project Management Tools and Methodologies. We have developed
processes and technologies to coordinate the integration of our services on a
national scale. E-Site, Virtual Project Manager and ProjectTalk are the tools
we utilize to help manage our projects. E-Site, our database program management
software tool, allows us to combine and analyze data relating to a project in
order to coordinate the many complex steps involved in a network deployment.
Virtual Project Manager allows project managers the flexibility of managing
schedules and resources in a Web-based environment. Project managers use the
data to analyze their projects and increase


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productivity. We also license a Web-based civil and site engineering software
tool known as ProjectTalk. This Web-based tool enables our customers to access
comprehensive project information on a real-time basis. Our project managers
facilitate feedback of information among the various specialized activities so
that our project teams work rapidly and effectively. E-Site, Virtual Project
Manager, and ProjectTalk permit us to optimize resource deployment and deliver
our services on time and within budget.

         Depth Of Skilled Personnel. Our principal asset is our staff of
approximately 750 people, which combines expertise in both wireless and
wireline technologies. We keep our personnel current on evolving technologies
through our programs of continuous technical education and equipment
manufacturer certification. Additionally, our employees gain excellent
technical skills by working on a range of projects with our diverse customer
base. Over 86% of our employees work directly on customer projects. Our staff
includes more than 350 engineers and technicians.

OUR SERVICES

         We are a leading provider of outsourced integrated network solutions
for the global telecommunications industry. Our services include network
planning, design, deployment and maintenance. We customize our services to fit
individual customer needs by offering both bundled and unbundled network
solutions. Our program management services integrate the planning, design,
deployment and maintenance of wireless and wireline telecommunications
networks. Our end-to-end solution includes:

         -        Identifying the optimal technology solution for our
                  customers' particular needs;

         -        Managing the subsequent bidding process from multiple
                  equipment vendors; and

         -        Managing network deployment to ensure seamless integration of
                  component parts.

In addition to providing a single point of project accountability, our program
management services provide integration synergies that allow our customers to
deploy their networks more rapidly while minimizing network deployment costs.

         Planning Services. We provide pre-deployment planning services for all
steps involved in developing or refining a network or deployment strategy. Our
engineers and other professional and support staff utilize their expertise and
experience to analyze the financial, engineering, competitive market and
technology issues applicable to a proposed network project. We work closely
with our customers to evaluate various alternatives for network implementation.
For new network deployments, o2wireless conducts a thorough demographic
analysis and preliminary network design. After completion of this analysis,
pertinent cost information is considered and factored to produce a
comprehensive network solution. We also offer specialized consulting services,
including auction services for wireless licenses, valuation services for
acquired licenses, and business planning services.


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         Design Services. We provide a full range of services for the design of
wireless telecommunications networks, which includes related wireline aspects
of the network. We maintain professional engineering licenses in all U.S.
states where they are required. Our design services include:

                  Radio Frequency Engineering and Network Design. Our technical
         experts study and analyze the traffic patterns, population density,
         topography and propagation environment in each market under
         consideration. Our radio frequency (RF) engineers design each
         integrated telecommunications system to meet the customer's
         requirements. Our wireless RF design services include detailed
         assessments of individual geographic markets, estimates of the cost of
         wireless coverage involved, and collection of comprehensive radio
         propagation data and modeling. We perform the calculations,
         measurements and tests necessary to determine the optimal placement of
         network equipment. This includes designing the network to make optimal
         use of radio frequencies, resulting in the highest possible signal
         quality for the greatest portion of subscriber usage within existing
         constraints. The constraints may be imposed by cost parameters,
         terrain, license limitations, interference with other operators, site
         availability, applicable zoning requirements or other factors.

                  Fixed Network Engineering. Most wireless calls are ultimately
         routed through a wireline network. As a result, the traffic from
         wireless networks must be connected with switching centers within
         wireline networks. For microwave, fiber optic and other transport
         technologies, we determine the optimal and most economical locations
         and methods for connection with other networks or with central
         switching stations on the wireline backbone. Our engineers are
         involved in specifying, provisioning and implementing fixed network
         facilities. Additionally, the convergence of voice and data networks,
         specifically through broadband technologies, such as LMDS, MMDS and
         Fast Ethernet, has created a new demand for specialized fixed network
         engineering skills. These skills include design, capacity and traffic
         analysis for packet-switched and IP router-based network elements. Our
         engineering teams are trained in specialized data networking and
         Internet protocol engineering issues.

                  Facilities Design and Engineering. We engineer and design the
         infrastructure of telecommunications facilities, including base
         station electronics, antennas and ancillary power equipment.

         Deployment Services. We provide our customers with comprehensive site
development and site audit services, including site feasibility and zoning
studies, lease negotiations, civil and structural engineering and third party
vendor management. We install all major types of wireless and wireline
telecommunications equipment, including base station electronics, antennas and
ancillary equipment. We also assist our customers in moving incumbent users of
their licensed


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spectrum to new frequencies by providing point-to-point and point-to-multipoint
line-of-sight microwave engineering and support services.

                  Site Development and Audit. We provide our customers with the
         resources to locate and develop the sites needed for the rollout of
         wireless systems. These activities include evaluating the zoning
         feasibility of wireless base stations, negotiating leases, performing
         the civil and structural engineering required to prepare the rooftop
         or tower site, and, when necessary, managing subcontractors and
         obtaining the proper electrical and telecommunications connections. We
         maintain general contractor licenses in all states where they are
         required, and
          the majority of our site acquisition employees have real estate
         licenses. Our proprietary software tool E-Site allows us and our
         customers to retrieve and analyze real-time data concerning their
         project deployment or maintenance. We also provide tower analysis
         services, including site audits, in which our technical experts
         gather, record and evaluate comprehensive data concerning a particular
         telecommunications site.

                  Equipment Installation and Optimization. We install all major
         types of wireless and wireline telecommunications equipment, including
         base station electronics, antennas and ancillary equipment. We also
         install and optimize DC and other power systems for telecommunications
         facilities. We perform specialized wireless and microwave tower
         erection and installation services and provide installation and
         optimization services for all major PCS, cellular and broadband
         wireless air interface standards, wireline and fiber optic cable
         equipment manufacturers. Further, we have created customized interior
         site audit and status reports that enable a customer to determine the
         exact configuration of equipment at a particular existing facility for
         which adequate records are not available.

                  Spectrum Clearing. In order for our customers to use the
         radio frequency spectrum they have licensed, it is often necessary for
         them to analyze the licensed spectrum for microwave interference and
         move incumbent users of this portion of the spectrum to new
         frequencies. We assist our customers in accomplishing this spectrum
         clearing function by providing complete point-to-point and
         point-to-multipoint line-of-sight microwave engineering and support
         services. Our engineering and support services include identifying
         existing microwave paths, negotiating relocation with incumbent users,
         managing and tracking relocation progress and documenting the final
         decommissioning of incumbent users. We also assist our customers with
         FAA and FCC filings, review and analysis.

                  Manufacture and Sales of Aviation Obstruction Lighting. We
         design, manufacture, market and install FAA-approved aviation
         obstruction lighting systems primarily for wireless towers. In
         addition to a line of standardized


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         lighting products, we design, manufacture and install custom
         obstruction lighting systems.

         Maintenance Services. Our network maintenance services are comprised
of post-deployment radio frequency optimization services, network operations
and lighting systems maintenance services, and network monitoring.

                  Post-Deployment Radio Frequency Optimization. Upon initial
         deployment, a network is adjusted to provide optimal wireless service
         based upon a set of parameters existing at that time, such as cell
         density, spectrum usage, base station site locations and estimated
         calling volumes and traffic patterns. In time, some of these
         parameters may change, requiring, for example, the relocation of base
         stations, addition of new equipment or the implementation of system
         enhancements. We offer ongoing radio frequency optimization services
         to periodically test network elements, tune the network for optimal
         performance and identify elements that need to be upgraded or
         replaced. We also offer benchmark testing and quality engineering
         services. We believe we are one of only three U.S. companies to
         perform RF compliance testing relating to employee safety in the
         vicinity of radiowave emitting devices.

                  Network Operations and Maintenance. We can assume
         responsibility for day-to-day operation and maintenance of our
         customers' telecommunications networks. We are also able to handle all
         aspects of physical plant maintenance, including infrastructure,
         supporting power systems and ancillary equipment. Our engineers and
         other professional and support staff work with our customers to
         allocate site maintenance and other responsibilities between our
         service team and the customer's personnel. We provide staffing to
         perform the necessary services for ongoing optimization, operations,
         maintenance and repair of critical network elements, including base
         station equipment, mobile switching centers and network operating
         centers to the extent required by our customers. We also provide
         training services for the internal network staff of our customers.

                  Remote Monitoring. We have designed and developed a
         proprietary fully integrated remote monitoring system for our
         obstruction lighting system. This remote, reverse diagnostics system
         has additional inputs for external applications such as card access,
         building temperature, gate access, pressure reading and power
         fluctuations as well as real-time reporting on obstruction lighting
         functions at a particular site. Our experience in remote monitoring
         includes establishing a Network Operations Center in Houston, Texas.

SALES AND MARKETING

         Our marketing strategy is centered around our brand name. The
principles behind the brand are:


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         -        Comprehensive End-to-End Solution;

         -        Company Recognition;

         -        Customer Satisfaction;

         -        Technical Expertise;

         -        Diverse Customer Base;

         -        Customer Retention; and

         -        Experienced Senior Management.

Our principal sales and marketing efforts are conducted by our field management
service teams, with our executive management supplementing their efforts at the
corporate level. The field management service teams directly market to existing
or potential customers to:

         -        Negotiate new contracts;

         -        Submit bids for master services agreements and individual
                  projects; and

         -        Develop and maintain our customer relationships.

Our external and internal communication services are marketed through corporate
marketing.

CUSTOMERS

         We provide our services to a large cross-section of the
telecommunications industry, with strong emphasis on the wireless sector. In
2000, we completed projects for more than 130 customers in eight countries. For
the year ended December 31, 2000, we received approximately 19% of our revenues
from Nortel Networks and 11% of our revenues from Crown Castle.

METHODOLOGY AND TECHNOLOGY

         Project Management Process.

         Our project managers use our specialized methodologies and software
tools to coordinate the many activities involved in planning, designing,
deploying and maintaining wireless telecommunications networks. Through the
combined efforts of our project managers and technical experts, we are able to
integrate and closely monitor the various stages of a network deployment. We
have dedicated resources that maintain and improve our project management
processes to better serve our customers, and improve the quality and efficiency
of our network deployments.

         Project Management Tools.

         E-Site. Our Web-enabled management software tool enables us to monitor
all phases of a network deployment. E-Site includes functions to assist in
property management, maintenance and project-critical reports. Property
management information can include tenants by site, tenant listing, tenant
lease/options, property summaries, summary of site visits and site inquiries.


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Master project timelines provide detailed, step-by-step action items and status
reports. The maintenance menu provides information on lease status, lease
types, power and telephone utilities, property managers, site ownership, site
types, tenants, vendors, and site visits, among other functions. In addition,
E-Site is highly flexible with respect to data import and export, accepting
connections to almost all database programs used by our customers.

         Virtual Project Manager. We license a third-party Web-based
application software known as Virtual Project Manager. Virtual Project Manager
allows analysis of a project using visuals such as Gantt charts, graphs, and
tables. This tool aggregates project information and permits viewing of real
time project data and posting of detailed project notes. In addition, Virtual
Project Manager provides a productivity audit tool for our customers during
network planning, design, deployment, and maintenance.

         ProjectTalk. We also license a Web-based civil and site engineering
software tool known as ProjectTalk, which is a very effective program for
managing multiple projects. The most valuable feature of ProjectTalk is the
documentation of activities during projects; therefore accountability of all
actions will be logged into the computer. Accessability to projects on the
Internet will allow all parties involved in a project to log-on and access
information in order to expedite a project. ProjectTalk is a valuable asset to
our project managers' daily operations.


HUMAN RESOURCES

         As of March 5, 2001, we had approximately 750 employees. We believe
that our future success will depend on our continued ability to attract,
retain, integrate and motivate qualified personnel, and upon the continued
service of our senior management and key technical personnel.

         We attract and retain employees by offering technical training
opportunities, a stock option award program, bonus opportunities, and
competitive salaries and benefits. Our Director of Technical Training arranges
for ongoing educational programs to enhance the technical abilities of our
employees through both classroom and field training. Additionally, our
employees upgrade their equipment manufacturer certifications regularly.

         Each new employee participates in an orientation program focusing on
our culture, organization and values. We are dedicated to maintaining an
innovative, entrepreneurial atmosphere where our employees work as a team to
regularly exceed the expectations of our customers.

COMPETITION

         Our market is highly competitive and is served by numerous network
infrastructure service providers. In most markets in which we operate,
o2wireless competes with:


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         -        Small privately-held companies operating in local markets;

         -        Larger companies servicing regional, national, and
                  international markets;

         -        Local, national, and multi-national engineering firms; and

         -        Equipment companies subcontracting portions of network
                  infrastructure projects to other contractors.

Despite the current trend toward outsourcing, network infrastructure services
are still generally performed by in-house labor; therefore, o2wireless faces
competition from existing or prospective customers who employ in-house
personnel to perform the same types of network infrastructure solutions. Other
principal competitive factors in our market include:

         -        Our ability to complete quality projects within budget and on
                  time;

         -        Customer satisfaction;

         -        Single-source accountability;

         -        Project management expertise;

         -        Industry experience;

         -        Competitive pricing;

         -        Expertise in emerging technologies; and

         -        Financial and operational resources.

We believe we possess two additional factors that give us a competitive
advantage: (1) our ability to integrate wireless and wireline technologies and
(2) our vendor and technology independence. However, there are factors that are
outside of o2wireless' control that can significantly impact future
opportunities within the industry including:

         -        Fluctuation in demand for our services;

         -        Cost of emerging or integrating technologies;

         -        Slowing of subscriber growth;

         -        Economic conditions; and

         -        Decreased internal customer budgets.

            There is a highly competitive bidding environment for network
infrastructure services. Historically, the price of the contractor's bid has
often been the principal factor in determining whether the contractor is
awarded the work. In this price-war environment, smaller companies may be
awarded contracts due to their lower overhead costs.


                                     -14-
<PAGE>   15


                               EXECUTIVE OFFICERS

         The executive officers of o2wireless Solutions are as follows:


<TABLE>
<CAPTION>
         NAME                                   AGE                 POSITION HELD
         ------------------------------------------------------------------------

         <S>                                    <C>                 <C>
         Stephen F. Johnston, Sr.                49                 Chairman  of  the  Board  and  Chief  Executive
                                                                    Officer

         Michael W. Riley                        53                 President and Chief Operating Officer

         William J. Loughman                     46                 Executive  Vice   President,   Chief  Financial
                                                                    Officer, Secretary and Treasurer

         John J. Meyer                           51                 Executive  Vice  President and Chief  Technical
                                                                    Officer
</TABLE>

         Executive officers are appointed by the Board of Directors of
o2wireless and hold office at the pleasure of the Board. Executive officers
devote their full time to the affairs of o2wireless and its subsidiaries.

         STEPHEN F. JOHNSTON, SR. has served as our Chairman and Chief
Executive Officer since he co-founded our company in 1991 under the name
American Communications Construction, Inc., which provided services to four
rural cellular telephone systems in Kentucky and West Virginia. In 1997, Mr.
Johnston formed Clear Communications Group, Inc. through the combination of
ACCI and two other wireless service providers. Prior to working in the
telecommunications industry, Mr. Johnston co-founded with his father an
elevator construction and maintenance company in 1980, which was subsequently
sold to Dover Elevator Company. Mr. Johnston has over 13 years of experience in
the telecommunications industry.

         MICHAEL W. RILEY joined o2wireless Solutions in November 1997 as our
President and Chief Operating Officer and has served as a director since that
time. Prior to joining o2wireless, Mr. Riley worked for AT&T Wireless as the
Vice President and General Manager from April 1996 through November 1997. In
that role, Mr. Riley was responsible for building out the network
infrastructure, developing the management organizations, formulating sales and
distribution strategies, and producing operating budgets for seven large PCS
markets. From 1992 through April 1996, Mr. Riley worked for Motorola as Vice
President and Director of Worldwide Operations and later as the President of
Iridium North America, a joint venture between Sprint, Motorola and Bell of
Canada. From 1987 through 1992, Mr. Riley served in several management
positions with Metro Mobile, a wireless cellular operator, including Director
of Marketing, General Manager and Vice President of Operations. Mr. Riley has
over 25 years of experience in the telecommunications industry.


                                     -15-
<PAGE>   16


         WILLIAM J. LOUGHMAN has served as our Executive Vice President, Chief
Financial Officer, Secretary and Treasurer since December 1999. Prior to that
time, Mr. Loughman served as our Vice President of Finance, Secretary and
Treasurer since April 1998. From November 1996 to April 1998, Mr. Loughman was
the Director of Business Development for AT&T Wireless. From 1993 to 1996, Mr.
Loughman was the Director of Operations for Motorola - Network Management
Group, a subsidiary of Motorola Inc. While employed with Motorola, Mr. Loughman
served as a director of several telecommunications companies, including Omnitel
Ltd. in Lithuania, Jordan Mobile Telephone Company in Jordan, St. Petersburg
Telecom in Russia, and Pakistan Mobile Communications Ltd. in Pakistan. Mr.
Loughman has over 15 years of experience in the telecommunications industry.

         JOHN J. MEYER joined o2wireless as Executive Vice President and Chief
Technical Officer in June 2000. Prior to joining o2wireless, Mr. Meyer was the
President of Communications Consulting Services, Inc. ("CCS"), a company he
founded in 1995. CCS was acquired by o2wireless in June 2000. Prior to his time
with CCS, Mr. Meyer served as President of the U.S. subsidiary of Mobile
Systems International, one of the largest engineering service firms supporting
the wireless industry, from 1992 to 1994. From 1991 to 1992, Mr. Meyer served
as Director of Engineering for Los Angeles Cellular. Mr. Meyer began his career
with GTE and Western Electric/Bell Labs. Mr. Meyer has over 25 years of
experience in the telecommunications industry.

                                  RISK FACTORS

         Investors should carefully consider the risks and uncertainties
described below and all other information contained in this Report on Form
10-K. Investing in the Company's common stock involves a high degree of risk.
Risks and uncertainties, in addition to those described below, that are not
presently known to the Company may also impair business operations. If any of
the following risks occur, our business, financial condition and operating
results could be harmed, the trading price of our common stock could decline,
and the Company's investors may lose all or part of their investment. See the
note regarding forward-looking statements included in "Item 1. Business" of
this Form 10-K.

RISKS RELATED TO OUR BUSINESS

OUR RESULTS OF OPERATIONS WILL SUFFER IF WE ARE UNABLE TO MANAGE OUR GROWTH
EFFECTIVELY.

         Our business has experienced significant expansion in the past two
years. Future expansion of our business will continue to place a significant
strain on our managerial, operational and financial resources. To manage the
expected future growth of our operations, we will be required to improve
existing and implement new operational, financial and management controls,
reporting systems and procedures; and integrate, train, motivate and manage


                                     -16-
<PAGE>   17


employees. If we fail to establish processes to manage our growth, our business
and results of operations may suffer because of the inability of our
infrastructure to support increased levels of business activity.

WE HAVE A HISTORY OF LOSSES, AND WE MAY NEVER ACHIEVE AND SUSTAIN
PROFITABILITY.

         We incurred net losses of approximately $2.4 million, $317,000 and
$15.3 million for the years ended December 31, 1998, 1999 and 2000,
respectively. Our ability to be profitable depends on our ability to generate
and maintain greater revenues while incurring reasonable expenses. We cannot be
certain that we will be able to achieve, sustain or increase profitability on a
quarterly or annual basis in the future. Our inability to achieve or maintain
profitability could impede implementation of our growth strategy or cause the
market price of our common stock to decrease.

WE HAVE RELIED AND CONTINUE TO RELY ON A LIMITED NUMBER OF CUSTOMERS FOR A
SIGNIFICANT PORTION OF OUR REVENUES. LOSING ONE OR MORE OF THESE CUSTOMERS MAY
ADVERSELY AFFECT OUR REVENUES.

         We generate a significant portion of our revenues from a limited
number of customers, and we expect that this will continue for the foreseeable
future. For example, for the year ended December 31, 2000, revenues from two of
our most significant customers, Nortel Networks and Crown Castle, each
accounted for more than 10% of our revenues, and collectively these customers
accounted for approximately 30% of our revenues. Further, our contracts with
our customers are for limited terms and our customers may discontinue use of
our services upon short notice. If we lose any of our large customers or if we
are unable to add new large customers, our revenues will not increase as
expected, or may decline. In addition, our reputation and brand name could be
harmed.

A LOSS OF ONE OR MORE OF OUR KEY CUSTOMERS OR DELAYS IN PROJECT COMPLETION FOR
SUCH CUSTOMERS COULD CAUSE A SIGNIFICANT DECREASE IN OUR REVENUES.

         We anticipate that some of our key customers will change in the future
as current projects are completed and new ones are begun. The services required
by any one customer can be limited by a number of factors, including industry
consolidation, technological developments, economic slowdown and internal
budget constraints. None of our customers is obligated to purchase additional
services, and most of our active customer contracts can be terminated without
cause or penalty by the customer on notice to us of 30 days or less. As a
result of these factors, the volume of work performed for specific customers is
likely to vary from period to period, and a major customer in one period may
not use our services in a subsequent period. Accordingly, we cannot be certain
that present or future customers will not terminate their network service
arrangements with us or significantly reduce or delay their projects. Any
termination, change, reduction or delay in our projects could result in reduced
revenues or a delay in receiving payments which would negatively impact our
business.

WE MAY NOT BE ABLE TO HIRE OR RETAIN A SUFFICIENT NUMBER OF QUALIFIED
ENGINEERS, TECHNICIANS, AND PROJECT MANAGERS TO SUSTAIN OUR GROWTH, MEET OUR
CONTRACT COMMITMENTS OR MAINTAIN THE QUALITY OF OUR SERVICES.

         Our future success will depend on our ability to attract and retain
additional highly skilled engineering and technical personnel. The actual
number of employees we will need to hire will fluctuate depending on the size,
number and timing requirements of contracts we receive. Experienced engineers,
project managers and other highly skilled employees are in great demand.
Competition for such personnel is intense, and we may be unable to attract
sufficiently qualified individuals in adequate numbers to meet the demand for
our services. Failure to hire an adequate number of individuals could limit our
ability to complete projects for our current customers and may limit our
ability to take on additional projects.

OUR OPERATING RESULTS MAY SUFFER BECAUSE OF COMPETITION IN THE WIRELESS
SERVICES INDUSTRY.

         The telecommunications network services market is highly competitive
and is served by numerous companies. Many of these competitors have
significantly greater financial, technical and marketing resources, generate
greater revenues and have greater name recognition and international experience
than we have. We believe that the principal competitive factors in our market
include the ability to deliver services within budget and on time, reputation,
accountability, project management expertise, industry experience and pricing
and expertise in new and evolving technologies. We may not be able to compete
effectively on these or other bases, and, as a result, we may not be able to
maintain our current customer relationships or develop new customer
relationships.


                                     -17-
<PAGE>   18


OUR QUARTERLY RESULTS MAY FLUCTUATE. IF WE FAIL TO MEET EARNINGS ESTIMATES, OR
CONTINUE TO INCUR NET LOSSES, OUR STOCK PRICE COULD DECLINE.

         Our quarterly and annual operating results have fluctuated in the past
and may vary in the future due to a variety of factors, including:

         -        the timing and size of network deployment by our customers
                  and the timing and size of orders for network equipment built
                  by our vendor customers;

         -        fluctuations in demand for our services;

         -        the length of sales cycles;

         -        reductions in the prices of services offered by our
                  competitors;

         -        costs of integrating technologies or businesses; and

         -        telecommunications market conditions and economic conditions
                  generally.

         Due to these factors, our quarterly revenues, expenses and results of
operations could vary significantly in the future. You should take these
factors into account when evaluating past periods, and, because of the
potential variability in our quarterly results, you should not rely upon
results of past periods as an indication of our future performance. In
addition, because our operating results may vary significantly from quarter to
quarter, results may not meet the expectations of securities analysts and
investors, and this could cause the price of our common stock to decline
significantly.

IF WE NEED ADDITIONAL FINANCING TO MAINTAIN OR EXPAND OUR BUSINESS, IT MAY NOT
BE AVAILABLE ON FAVORABLE TERMS, OR AT ALL

         Although we believe our current cash and borrowing capacity will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for at least the next 12 months, we may need additional funds to
expand or meet all of our operating needs. If we need additional financing, we
cannot be certain that it will be available to us on favorable terms, if at all.
Our ability to borrow under our credit facility is contingent upon achievement
of profitability during fiscal year 2001. Also, the terms of any additional
financing we obtain may significantly limit our future financing and operating
activities. If we need funds and cannot raise them on acceptable terms, we may
be forced to sell assets or seek to refinance our outstanding obligations.

WE RECOGNIZE REVENUES ON OUR FIXED-PRICE CONTRACTS ON A
PERCENTAGE-OF-COMPLETION BASIS, WHICH COULD CAUSE OUR QUARTERLY RESULTS TO
FLUCTUATE.

         We recognize revenues on our fixed-price contracts using the
percentage-of-completion method. In 2000, revenues from our fixed-price
contracts accounted for approximately 74% of our total revenues. Under the
percentage-of-completion method, in each period we recognize


                                     -18-
<PAGE>   19


expenses as they are incurred and we recognize revenue based on a comparison of
the costs incurred to date for the project to the then estimated total costs of
the project. Accordingly, the revenue we recognize in a given quarter depends on
the costs we have incurred for individual projects and our then current estimate
of the total remaining costs to complete individual projects. These estimates
are reviewed on a contract-by-contract basis, and are revised periodically
throughout the life of the contract such that adjustments to the results of
operations relating to these provisions are reflected in the period of revision.
Estimated costs to complete a project are based on many factors. Accordingly,
the final project cost may vary from the original estimate. Certain project
costs can vary significantly from original estimates which may lead to
significant fluctuations in actual gross margin compared to projected margins.
As a result, our gross margin in such periods and in future periods may be
significantly reduced and in some cases we may recognize a loss on individual
projects prior to their completion. To the extent that our estimates fluctuate
over time or differ from actual requirements, gross margins in subsequent
quarters may vary significantly from our estimates and could harm our results of
operations.

OUR BUSINESS MAY BE HARMED IF WE INCREASE OUR STAFFING LEVELS IN ANTICIPATION
OF A PROJECT AND UNDERUTILIZE OUR PERSONNEL BECAUSE SUCH PROJECT IS DELAYED,
REDUCED OR TERMINATED.

         Since our business is driven by large, and sometimes multi-year
contracts, we forecast our personnel needs for future projected business. If we
increase our staffing levels in anticipation of a project and such project is
delayed, reduced or terminated, we may underutilize these additional personnel,
which would increase our general and administrative expenses and could
adversely affect our results of operations.

IF OUR THIRD-PARTY SUBCONTRACTORS FAIL TO COMPLETE PROJECTS IN A TIMELY MANNER
OR FAIL TO PROVIDE THE QUALITY OF SERVICE WE EXPECT IN OUR SERVICE OFFERINGS,
OUR REPUTATION IN THE INDUSTRY COULD BE HARMED WHICH COULD NEGATIVELY AFFECT
OUR ABILITY TO KEEP OUR CUSTOMERS OR ATTRACT NEW BUSINESS.

         We use third-party subcontractors on a substantial number of our
projects. Although we take care to identify subcontractors with the requisite
experience, we may not be able to control the quality of the work completed by
these subcontractors or retain experienced subcontractors on acceptable terms,
if at all. Further, our inability to hire sufficient subcontractors could limit
our ability to complete projects for customers in a timely manner or provide
the quality we expect in our service offerings and our reputation in the
industry could be harmed, which could negatively affect our ability to keep our
customers or attract new business. In addition, we may not be able to hire
third-party subcontractors at attractive rates which could negatively impact
our financial results.


                                     -19-
<PAGE>   20


OUR BUSINESS STRATEGY INCLUDES THE POSSIBLE ACQUISITION OF OTHER BUSINESSES,
BUT WE MAY NOT BE ABLE TO IDENTIFY APPROPRIATE ACQUISITION CANDIDATES OR
PROPERLY INTEGRATE THEIR BUSINESSES.

         From time to time, we may consider possible acquisitions of other
businesses. We expect to face competition for acquisition candidates, which may
limit the number of acquisition opportunities and may lead to higher
acquisition prices. Also, we may not be able to identify, acquire or manage
additional businesses profitably or successfully integrate the acquired
businesses with our business. Businesses that we acquire may have liabilities
that we underestimate or do not discover during our pre-acquisition
investigations. Some of the liabilities of the businesses we acquire, even if
we do not expressly assume them, may be imposed on us as the successor to the
business. Further, each acquisition involves a number of other special risks
that could cause the acquired business to fail to meet our expectations. For
example:

         -        the acquired business may not achieve expected results;

         -        we may not be able to retain key personnel of the acquired
                  business;

         -        we may incur substantial, unanticipated costs, delays or
                  other operational financial problems when we try to integrate
                  the business with our own;

         -        our management's attention may be diverted; or

         -        our management may not be able to manage the combined entity
                  effectively or to make acquisitions and grow our business
                  internally at the same time.

         We cannot predict the timing, size or success of any future
acquisitions, our ability to integrate any acquired businesses, or their
associated capital requirements. In addition, we may not be able to obtain
acquisition financing when required, or such financing may only be available on
terms and conditions that are unacceptable to us. If we utilize our stock to
make acquisitions current shareholders may be diluted which could cause our
stock price to decline. If we fail to address the above issues, or if we are
unable to fund our acquisition plans, our growth could be limited.

OUR FUTURE EARNINGS WILL BE NEGATIVELY AFFECTED BECAUSE WE WILL BE AMORTIZING
GOODWILL INCURRED IN PRIOR ACQUISITIONS.

         As a result of the acquisitions which we have completed since November
1997, we are required to record amortization expense related to goodwill. In
connection with an acquisition, goodwill represents the excess of the purchase
price paid for the acquired entity over the fair value of the net identifiable
assets acquired. The goodwill acquired in our acquisitions is amortized on a
straight-line basis over a period of 5-10 years. The aggregate amount of
goodwill recorded by us for the acquisitions we have completed since November
1997 is approximately $32.0 million. Based upon the current amount of goodwill,
our annual amortization expense will be approximately $6 million through 2005,
and thereafter will decrease each year through 2010. At December 31, 2000,
goodwill accounted for approximately 23% of our total assets. Any


                                     -20-
<PAGE>   21


further increase in the amount of amortization expense from future acquisitions
will further reduce our earnings or increase our losses.

IF WE FAIL TO PROPERLY MANAGE ANY FUTURE INTERNATIONAL EXPANSION, IT COULD
NEGATIVELY AFFECT OUR ABILITY TO RETAIN CUSTOMERS WHO HAVE INTERNATIONAL
OPERATIONS OR CAUSE US TO LOSE BUSINESS TO OUR COMPETITORS WHICH DO HAVE
ESTABLISHED INTERNATIONAL OPERATIONS.

         We have begun to establish international operations requiring us to
hire additional personnel and establish relationships with additional suppliers
and customers. This expansion may require significant financial resources and
management attention and if such expansion is not properly managed, this could
have a negative effect on our ability to retain customers who have international
operations or cause us to lose business to our competitors who do have
established international operations. In addition, our international business
may be subject to a variety of risks, including, among other things, increased
costs associated with maintaining international marketing efforts, applicable
government regulation, fluctuations in foreign currency, and difficulties in
collecting international accounts receivable.


                                     -21-
<PAGE>   22


IF OUR CUSTOMERS DO NOT RECEIVE SUFFICIENT FINANCING, OUR BUSINESS MAY BE
SERIOUSLY HARMED.

         Some of our customers and potential customers have limited operating
histories and financial resources. These customers often must obtain
significant amounts of financing to fund their operations and deploy their
networks. We frequently work with such companies prior to their receipt of
financing. If these customers fail to receive adequate financing and therefore
fail to make timely payments to us, we could lose expected revenues and our
results of operations would be harmed.

WE MUST KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE, MARKET CONDITIONS AND
INDUSTRY DEVELOPMENTS TO MAINTAIN OR GROW OUR REVENUES.

         The market for wireless and other network system design, deployment
and management services is characterized by rapid change and technological
improvements. Our future success will depend in part on our ability to enhance
our current service offerings to keep pace with technological developments and
to address increasingly sophisticated customer needs. We may not be successful
in developing and marketing in a timely manner service offerings that respond
to the technological advances by others and our services may not adequately or
competitively address the needs of the changing marketplace.

OUR BUSINESS OPERATIONS COULD BE SIGNIFICANTLY DISRUPTED IF WE LOSE MEMBERS OF
OUR MANAGEMENT TEAM.

         We believe that our success depends to a significant degree upon the
continued contributions of our executive officers and other key personnel, both
individually and as a group. Our future performance will be substantially
dependent on our ability to retain and motivate them. We have entered into
employment agreements with certain members of our senior management team.
However, loss of the services of any of our executive officers, particularly
Stephen F. Johnston, Sr., our Chairman and Chief Executive Officer, Michael W.
Riley, our President and Chief Operating Officer, William J. Loughman, our
Chief Financial Officer, or John J. Meyer, our Chief Technical Officer, could
prevent us from executing our business strategy.

WE MAY ENCOUNTER POTENTIAL COSTS OR CLAIMS RESULTING FROM PROJECT PERFORMANCE.

         Many of our engagements involve projects that are significant to the
operations of our customers' businesses. Our failure to meet a customer's
expectations in the planning or implementation of a project or the failure of
unrelated third party contractors to meet project completion deadlines could
damage our reputation and adversely affect our ability to attract new business.
We frequently undertake projects in which we guarantee performance based upon
defined operating specifications or guaranteed delivery dates. Unsatisfactory
performance or


                                     -22-
<PAGE>   23


unanticipated difficulties or delays in completing such projects may result in
a direct reduction in payments to us, or payment of damages by us, which could
harm our business.

RISKS RELATED TO OUR INDUSTRY

OUR SUCCESS IS DEPENDENT ON CONTINUED GROWTH IN THE DEPLOYMENT OF WIRELESS
NETWORKS, AND OUR REVENUES WILL BE REDUCED IF THERE ARE DELAYS IN SUCH
DEPLOYMENT.

         The wireless telecommunications industry has experienced a dramatic
rate of growth both in the United States and internationally in recent years;
however, the rate of growth has slowed significantly in the first quarter of
2001 as compared to prior years. Presently, there is significant uncertainty
related to the U.S. economy, and if the rate of growth in the telecom industry
continues to slow and carriers reduce their capital investments in wireless
infrastructure or fail to expand into new geographies, our business and results
of operations will suffer. In addition, the pace of network deployment is
sometimes slower than expected due in part to difficulties experienced by
holders of licenses in raising the necessary financing, and there can be no
assurance that future bidders for licenses will not experience similar
difficulties. There has also been substantial regulatory uncertainty regarding
payments owed to the U.S. Government by past successful wireless bidders, and
such uncertainty has delayed network deployments. Factors such as overall
economic conditions, a slowdown in wireless subscriber growth, costs of
integrating technologies, as well as future legislation, legal decisions and
regulation, may slow or delay the deployment of wireless networks, which, in
turn, would harm our business.

OUR SUCCESS IS DEPENDENT ON THE CONTINUED TREND TOWARD OUTSOURCING
TELECOMMUNICATIONS NETWORK SERVICES.

         Our success is dependent on the continued trend by telecommunications
companies to outsource their network design, deployment and management needs. If
telecommunications companies and network equipment vendors elect to perform more
network design or deployment services themselves, our revenues will likely
decline and our business and results of operations would be harmed.

THE CONSOLIDATION OF EQUIPMENT VENDORS OR CARRIERS COULD ADVERSELY AFFECT OUR
BUSINESS.

         In recent years, the wireless telecommunications industry has been
characterized by significant consolidation activity. This consolidation of
equipment vendors or carriers could:

         -        lead to a greater ability among equipment vendors and
                  carriers to provide a full line of network services and could
                  simplify integration and installation, which may lead to a
                  reduction in demand for our services;

         -        reduce the number of our current or potential customers which
                  could increase their bargaining power; and

         -        create competitive pressures whereby a particular customer
                  may request our exclusivity with them in a particular market,
                  which we may not be able to accommodate


                                     -23-
<PAGE>   24


Accordingly, any of the foregoing developments could adversely affect our
business and results of operations.

OUR STOCK PRICE MAY BE PARTICULARLY VOLATILE BECAUSE OF THE INDUSTRY WE ARE IN.

         The stock market in general has recently experienced a significant
overall decline, including extreme price and volume fluctuations. In addition,
the market prices of securities of technology and telecommunications companies
have been extremely volatile and have experienced fluctuations that have
sometimes been unrelated to or disproportionate to the operating performance of
such companies. These broad market fluctuations can be expected to adversely
affect the price of our common stock.

OUR EXECUTIVE OFFICERS AND DIRECTORS AND THEIR AFFILIATES CONTROL A MAJORITY OF
OUR COMMON STOCK AND, AS A RESULT, ARE ABLE TO EXERCISE CONTROL OVER ALL
MATTERS REQUIRING SHAREHOLDER APPROVAL.

         Our executive officers and directors and their affiliates beneficially
own, in the aggregate, a majority of our outstanding common stock. In
particular, our Chairman and Chief Executive Officer, Stephen F. Johnston, Sr.,
beneficially owns, in the aggregate, approximately 23% of our outstanding
common stock. As a result, these shareholders are able to exercise significant
influence over all matters requiring shareholder approval, including the
election of directors and approval of significant corporate transactions, which
may have the effect of delaying or preventing a third party from acquiring
control over us. These transactions may include those that other shareholders
deem to be in their best interests and in which those other shareholders might
otherwise receive a premium for their shares over then current prices.

PROVISIONS IN OUR CHARTER DOCUMENTS MAY MAKE IT DIFFICULT FOR A THIRD PARTY TO
ACQUIRE OUR COMPANY AND COULD DEPRESS THE PRICE OF OUR COMMON STOCK.

         Our articles of incorporation and bylaws contain provisions that could
delay, defer or prevent a change in control of our company or our management.
These provisions could also discourage proxy contests and make it more
difficult for you and other shareholders to elect directors and take other
corporate actions. As a result, these provisions could limit the price that
investors are willing to pay in the future for shares of our common stock.
These provisions include:

         -        establishing a staggered board of directors;

         -        authorizing the board of directors to issue additional
                  preferred stock, which could be issued quickly with terms
                  that delay or prevent a change in control; and

         -        prohibiting shareholder action by written consent.


                                     -24-
<PAGE>   25


ITEM 2.  PROPERTIES.

         Our principal executive offices are located in approximately 11,000
square feet of office space in Atlanta, Georgia. The lease for such space
expires in May 2003. We also lease office and, in some instances, warehouse
space in Arizona, California, Illinois, Maryland, New Jersey, North Carolina
and Texas. The leases on these spaces expire at various times through November,
2004. We also own office space in Kentucky. We expect to continue our growth
and will negotiate leased space to accommodate this growth as it occurs.

ITEM 3.  LEGAL PROCEEDINGS.

         From time to time, we become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. We are not currently
a party to any legal proceeding which we expect, in the event of an adverse
outcome, would have a material adverse effect on our business.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matter was submitted during the fourth quarter ended December 31,
2000 to a vote of our security holders.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

         Our common stock is traded on the Nasdaq National Market under the
symbol "OTWO." The common stock began trading on the Nasdaq National Market on
August 16, 2000. The following table sets forth for the periods indicated the
quarterly high and low bid quotation per share as reported by the Nasdaq
National Market. These quotations also reflect inter-dealer prices without
retail mark-ups, mark-downs, or commissions and may not necessarily represent
actual transactions.


<TABLE>
<CAPTION>
                                                        HIGH            LOW
                                                        ----            ---
   <S>                                                <C>             <C>
   Fiscal year ended December 31, 2000
       Third Quarter...........................       $24.313         $11.766
       Fourth Quarter..........................        18.875          5.813
</TABLE>


                                     -25-
<PAGE>   26

HOLDERS

         As of March 15, 2001, there were approximately 92 holders of record of
our common stock. We believe that there are in excess of 1,500 beneficial
holders of our common stock.

DIVIDENDS

         We have never paid dividends on our common stock. Covenants in our
financing arrangements prohibit or limit our ability to declare or pay cash
dividends. For a more complete description of these restrictions, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." We currently intend to retain any future earnings to finance the
growth and development of our business and therefore do not anticipate paying
any cash dividends in the foreseeable future. Any future determination to pay
cash dividends will be at the discretion of our Board of Directors and will
depend upon our financial condition, results of operations, capital
requirements, general business conditions and other factors that the Board of
Directors may deem relevant.

SALES OF UNREGISTERED SECURITIES

         On November 15, 2000, Stephen F. Johnston, Sr., our Chairman and Chief
Executive Officer, exercised warrants to purchase an aggregate of 200,652 shares
of our common stock. As the warrants were exercised on a cashless basis
(resulting in the cancellation of 60 shares), no consideration was received by
the Company in connection with this issuance.

         In connection with our acquisition of HAF Limited, in December, 2000,
we issued 140,625 shares to the former shareholders of HAF Limited in exchange
for all of the outstanding shares of capital stock of HAF Limited. As additional
consideration to the shareholders of HAF Limited, we paid $2,925,000 in cash and
issued $450,000 in promissory notes.

         The issuances of securities described above in the preceding two
paragraphs were made in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended, as transactions by an
issuer not involving a public offering. All of the securities were acquired by
the recipients thereof for investment and with no view toward the resale or
distribution thereof. Each of the purchasers had a pre-existing relationship
with the Company or its founders, the offers and sales were made without any
public solicitation, and the stock certificates bear restrictive legends. No
underwriter was involved in any of the transactions and no commissions were
paid.

ITEM 6.  SELECTED FINANCIAL DATA.
(IN THOUSANDS, EXCEPT PER SHARE DATA)

         You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Risk Factors" included elsewhere in this Form 10-K.


                                      -26-
<PAGE>   27

         The historical consolidated statements of operations data set forth
below are derived from and qualified by reference to our consolidated financial
statements included elsewhere in this Form 10-K. The historical results are not
necessarily indicative of results to be expected in any future period.

<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                         --------------------------------------------------------------------
                                                          1996           1997           1998           1999            2000
                                                         -------       --------       --------       --------       ---------

<S>                                                      <C>           <C>            <C>            <C>            <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Revenues                                                 $ 2,208       $  6,003       $ 24,485       $ 48,631       $ 140,336
Cost of Revenues                                           1,619          5,078         19,523         35,611          99,623
Selling general and administrative expenses                1,417          2,092          5,035          9,825          27,428
Depreciation and amortization                                 28            193          1,398          2,120           4,260
                                                         -------       --------       --------       --------       ---------
Operating (loss) income                                     (856)        (1,360)        (1,471)         1,075           9,025

Increase in fair value of common stock put warrants           --             --             --             --         (13,681)

Total other expense                                          (66)          (145)          (887)        (2,241)         (3,299)
                                                         -------       --------       --------       --------       ---------

Loss before income taxes, extraordinary item and
  cumulative effect of accounting change                    (922)        (1,505)        (2,358)        (1,166)         (7,955)

Income tax (expense) benefit                                 (55)           145            (45)         1,226          (3,099)
                                                         -------       --------       --------       --------       ---------

(Loss) income before  extraordinary item and
  cumulative effect of accounting change                    (977)        (1,360)        (2,403)            60         (11,054)

Extraordinary item                                            --             --             --           (256)         (4,294)
Cumulative effect of change in accounting principle           --             --             --           (121)             --
                                                         -------       --------       --------       --------       ---------
Net loss                                                    (977)        (1,360)        (2,403)          (317)        (15,348)

Preferred stock dividends and accretion of discount
 on redeemable preferred stock                                --             (9)          (413)          (632)         (6,148)
                                                         -------       --------       --------       --------       ---------

Net loss  to common shareholders                         $  (977)      $ (1,369)      $ (2,816)      $   (949)      $ (21,496)
                                                         =======       ========       ========       ========       =========

Basic and diluted loss per common share                  $ (0.18)      $  (0.22)      $  (0.40)      $  (0.13)      $   (1.44)

Basic and diluted weighted average shares                  5,300          6,329          7,108          7,189          14,980
                                                         =======       ========       ========       ========       =========

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents                                $   202       $    793       $    186       $  2,509       $  12,191
Working capital                                              390            702          2,138         12,009          44,375
Total assets                                                 977         12,237         19,191         59,473         116,289
Total debt, including common stock put warrants            2,142          4,475         11,394         35,062           7,387
Redeemable preferred stock                                    --          4,462          4,875         10,960              --
Total stockholders' equity (deficit)                      (1,607)        (4,513)          (920)        (3,004)         73,675
</TABLE>


                                      -27-
<PAGE>   28




ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

         This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements regarding our expected financial position
and operating results, our business strategy and our financing plans are
forward-looking statements. These statements can sometimes be identified by our
use of forward-looking words such as "may," "will," "anticipate," "estimate,"
"expect," or "intend." Known and unknown risks, uncertainties and other factors
could cause our actual results to differ materially from those contemplated by
these statements. Such risks and uncertainties include, but are not limited to,
general economic conditions, competition in the wireless services industry, the
Company's ability to manage its growth effectively, the Company's ability to
implement its acquisition strategy, fluctuations in quarterly operating results
and other uncertainties detailed from time to time in the Company's Securities
and Exchange Commission filings. The section entitled "Risk Factors" in Item 1
of this Form 10-K, discusses some additional important factors that could cause
the Company's actual results to differ materially from those in such
forward-looking statements.

         Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. We are under no obligation to
update any of the forward-looking statements after the filing of this Form 10-K
to conform such statements to actual results or to changes in our expectations.

         The following discussion should be read in conjunction with our
financial statements and the related notes and other financial information
appearing elsewhere in this Form 10-K.

OVERVIEW

         We provide a full range of network services to all sectors of the
global wireless telecommunications industry. Our services range from business
planning and design through deployment and maintenance services for
telecommunications networks.

         We have built our business through both internal growth and
acquisitions. During the past few years, we acquired certain strategically
positioned companies in order to create an integrated telecommunications
services company with depth and expertise in wireless and wireline technologies
and a broad geographical presence. We acquired Cellular Technology
International, Inc., based in North Carolina, to increase our capacity to
install and commission wireless and wireline infrastructure and to strengthen
our equipment engineering capabilities. We acquired TWR Telecom, Inc. and its
subsidiaries, along with Specialty Drilling, Inc. based in Houston, to increase
our geographic presence in the southwestern U.S. and to add civil and


                                      -28-
<PAGE>   29

structural engineering. These acquisitions also provided us with implementation
capacity and a hazard/navigation lighting manufacturing business. We acquired
McKenzie Telecommunications Group, Inc., based in Phoenix, to expand our
capabilities in site acquisition, zoning, program management and implementation
of large projects. In June 2000, we acquired Communication Consulting Services,
Inc. to further enhance our systems engineering capabilities. In December 2000,
we acquired HAF Limited, an international consulting firm focused on wireless
and broadband technologies, to expand our European market coverage and enhance
our service offerings abroad. Finally, in January 2001, we acquired Young &
Associates, Inc. to expand our capabilities in site development and consulting
services. All of our acquisitions have been accounted for under the purchase
method of accounting. Aggregate goodwill for all of our acquisitions from 1997
to 2000 is approximately $32.0 million, which is generally being amortized on a
straight-line basis over 5-10 years, the expected period of benefit.

         We generally offer our network planning, design and deployment services
on either a fixed-price or a time-and-materials basis, with scheduled deadlines
for completion times, that is, on a time-certain basis. We recognize revenues on
time and materials contracts as services are rendered. We recognize revenues for
our fixed-price contracts using the percentage-of-completion method. Under the
percentage-of-completion method, in each period we recognize expenses as they
are incurred, and we recognize revenue based on a comparison of the current
costs incurred for the project to the then estimated total costs of the project.
Accordingly, the revenue we recognize in a given quarter depends on the costs we
have incurred for individual projects and our then current estimate of the total
remaining costs to complete individual projects. These estimates are reviewed on
a contract-by-contract basis, and are revised periodically throughout the life
of the contract such that adjustments to the results of operations relating to
these revisions are reflected in the period of revision. Our estimated costs for
a project are based on many factors. Accordingly, the final project cost may
vary from the original estimate. Certain project costs can vary significantly
from original estimates, which may lead to significant fluctuations in actual
gross margin as compared to projected margins. As a result, gross margins in
future periods may be significantly reduced, and in some cases a loss may be
required to be recognized. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. In 2000,
revenues from our fixed-price contracts accounted for approximately 74% of our
total revenues. Our contracts are typically structured with milestone events
that dictate the timing of payments to us from our customers. Accordingly, there
may be a significant delay between the date we record revenue and the date we
receive payment from our customers. During our planning process, we divide
projects into deliverables, which enables us to better understand the costs
associated with each of the components and minimizes the risks of exceeding our
initial estimates.

         Our customers include wireless carriers, equipment vendors, tower
companies, and broadband carriers. We have derived, and believe that we will
continue to derive, a significant portion of our revenues from a limited number
of customers. For the year ended December 31, 2000, we derived 19% of revenues
from Nortel Networks and 11% of revenues from Crown Castle. In each case, our
business was obtained from multiple departments within the


                                      -29-
<PAGE>   30

organization. The volume of work performed for specific customers is likely to
vary from period to period, and a major customer in one period may not use our
services in a subsequent period.

         Our cost of revenues includes direct materials, compensation and
benefits, living and travel expenses, payments to third-party sub-contractors
and other direct project-related expenses, and allocations of indirect overhead.
As of December 31, 2000, we had 663 employees working on contracted projects.
Our cost of revenues excludes down-time for direct compensation and benefits,
training and other indirect overhead and related costs, all of which are
included in selling, general and administrative expenses.

         Selling, general and administrative expenses include compensation and
benefits, facilities expenses and other expenses not related directly to
projects.

         Depreciation and amortization expenses include depreciation on our
furniture, fixtures and equipment and amortization related to our recent
acquisitions.

         Interest expense is primarily related to interest on notes payable to
affiliates and our banking facilities.

         Prior to our initial public offering in August 2000, we granted options
to certain of our employees at exercise prices below our initial public offering
price of $12.00 per share, which resulted in a total future compensation expense
of approximately $1.9 million to be recognized over the vesting periods of the
options. A majority of the aggregate expense amount will be recognized over a
two year period. Of this aggregate amount, approximately $523,000 was expensed
in fiscal 2000.

         On August 21, 2000, we completed the initial public offering of our
common stock. In connection with the completion of that offering, we issued
5,798,623 shares of our common stock for net proceeds (after underwriter
discounts and offering expenses) of approximately $62.7 million in cash, which
was used to pay off approximately $31.3 million under our credit facility, $13
million in subordinated indebtedness and $7.9 million in redeemable preferred
stock. In connection with the public offering, each share of our convertible
preferred stock automatically converted into approximately 96.7 shares of our
common stock, or an aggregate of 8,565,444 shares.

         Included in our provision against contract revenues receivable at
December 31, 1999, were provisions of approximately $675,000 established against
receivables acquired as part of an acquisition in late 1999. Subsequently in the
second quarter of 2000, the receivables were collected and the provisions were
reversed and recorded to goodwill.

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 2000

         Revenues. Our revenues increased 189%, or $91.7 million, from $48.6
million for the year ended December 31, 1999 to $140.3 million for the year
ended December 31, 2000. The


                                      -30-
<PAGE>   31
increase was primarily attributable to growth in existing business from new
contracts with the most significant growth being in our design and deployment
services and from acquisitions. The increase in revenues attributable to
internal growth amounted to approximately $51.9 million. The remaining portion
of the increase in revenues is attributable to our acquisitions of TWR Telecom,
Inc. and McKenzie Telecommunications Group, Inc., both of which were completed
in November 1999 and the acquisitions of Communication Consulting Services,
Inc., Wireless Sites Development, Inc., and HAF Limited during 2000. The
percentage growth in revenues experienced for the year ended December 31, 2000
was significant, and anticipated percentage growth for 2001 is expected to be
significantly lower, if at all.

         Cost of Revenues. Our cost of revenues increased 180% from $35.6
million, or 73% of revenues, for the year ended December 31, 1999 to $99.6
million, or 71% of revenues, for the year ended December 31, 2000, primarily due
to the increase in the number of contracts associated with our acquisitions.
Costs also increased significantly due to increased staffing costs to support
the significant growth in existing businesses. Gross margin increased to 29% for
the year ended December 31, 2000 from 27% for the year ended December 31, 1999
due to higher margin contracts from our acquisitions, along with a shift in the
mix of services to higher margin services.

         Selling, General and Administrative Expenses. Our selling, general and
administrative expenses increased from $9.8 million, or 20% of revenues, for the
year ended December 31, 1999 to $27.4 million, or 20% of revenues, for the year
ended December 31, 2000. The increase in selling, general and administrative
expenses in absolute dollars primarily reflects an increase in costs associated
with our acquisitions along with increased executive, administration and systems
personnel to support our significant growth. Selling, general and administrative
expenses are expected to increase in absolute dollars in 2001.

         Depreciation And Amortization. Depreciation and amortization increased
101% from $2.1 million for the year ended December 31, 1999 to $4.3 million for
the year ended December 31, 2000 due primarily to our acquisitions along with
increased capital expenditures to support growth in our existing business.
Future depreciation and amortization is expected to increase due to our recent
acquisitions, utilization of five year amortization periods for goodwill for
acquisitions completed in 2000 as well as additional property and equipment
additions.

         Interest Expense. Interest expense increased 64% from $2.3 million for
the year ended December 31, 1999 to $3.8 million for the year ended December 31,
2000. As a percentage of revenues, interest expense declined to approximately
2.7% for the year ended December 31, 2000 from approximately 4.8% for the year
ended December 31, 1999. The increase in absolute dollars is due to higher
utilization of our bank line of credit for acquisition purposes and working
capital needs prior to our initial public offering.

         Other Income (Expense). For the year ended December 31, 1999, other
income was $102,000 as compared to $13.1 million of other expense for the year
ended December 31, 2000. The expense for the year ended December 31, 2000,
primarily represented a one-time increase in


                                      -31-
<PAGE>   32

the fair value of put warrants. The put provision of the common stock put
warrants expired upon completion of the initial public offering.

         Income Taxes. For the year ended December 31, 1999, we had an income
tax benefit of $1.2 million as compared to an income tax expense of $3.1 million
for the year ended December 31, 2000. The benefit for 1999 was primarily
attributable to the decrease in the valuation allowance and recognition of
deferred tax benefits. At December 31, 2000, we had a net operating loss
carry-forward of $5.2 million, which gives rise to substantially all of our
gross deferred tax asset. Certain limitations exist on the usage of the net
operating loss, but it is estimated all of the $5.2 million is available for
utilization in 2001.

         Extraordinary Items. For the year ended December 31, 1999 we reported
an extraordinary loss of $256,000, net of income tax benefit of $171,000. The
extraordinary loss resulted from the extinguishment of indebtedness in
connection with the refinancing of our credit facility. For the year ended
December 31, 2000, we reported an extraordinary loss of $4.3 million, net of
income tax benefit of $2.2 million. This extraordinary loss resulted from the
extinguishment of indebtedness in connection with our initial public offering.
Approximately $2.6 million of this loss represents the amount of the then
unaccreted discount on our senior subordinated notes that was expensed upon the
early repayment of the notes with proceeds from the initial public offering. The
remaining $1.7 million of this loss related to the write-offs of the then
remaining capitalized loan costs relating to loans repaid.

         In addition, for the year ended December 31, 1999, we recorded an
expense of $121,000 relating to the effect of changing our accounting method for
organization costs from deferral to expensing these costs as incurred.

         Net Loss. Our net loss increased from $317,000 for the year ended
December 31, 1999 to $15.3 million for the year ended December 31, 2000. This
increase in net loss for the year ended December 31, 2000 is attributable to the
$13.7 million non-cash charge as described above in "Other Income (Expense)" and
the extraordinary items as discussed above in "Extraordinary Items".

COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1999

         Revenues. Our revenues increased 99% from $24.5 million for the year
ended December 31, 1998 to $48.6 million for the year ended December 31, 1999.
The increase was primarily attributable to our acquisitions of Cellular
Technology International, Inc. in January 1999, and TWR Telecom, Inc. and
McKenzie Telecommunications Group, Inc., both of which were completed in
November 1999. The increase in revenues attributable to internal growth amounted
to approximately $7.1 million primarily in design and deployment services. The
remaining portion of the increase in revenues is attributable to our
acquisitions.

         Cost Of Revenues. Our cost of revenues increased from $19.5 million, or
80% of revenues, for the year ended December 31, 1998 to $35.6 million, or 73%
of revenues, for the


                                      -32-
<PAGE>   33

year ended December 31, 1999, primarily due to the increase in the number of
contracts associated with our acquisitions. Costs also increased significantly
due to increased staffing costs to support the significant growth in existing
businesses. Gross margin increased to 27% for the year ended December 31, 1999
from 20% for the year ended December 31, 1998 due to higher margin contracts
from our acquisitions, along with a shift in the mix of services to higher
margin services.

         Selling, General and Administrative Expenses. Our selling, general and
administrative expenses increased from $5.0 million, or 21% of revenues, for the
year ended December 31, 1998 to $9.8 million, or 20% of revenues, for the year
ended December 31, 1999. The increase in selling, general and administrative
expenses in absolute dollars was primarily attributable to our acquisitions, as
well as the growth in existing businesses.

         Depreciation And Amortization. Depreciation and amortization increased
52% from $1.4 million for the year ended December 31, 1998 to $2.1 million for
the year ended December 31, 1999 due primarily to our acquisitions along with
increased capital expenditures to support growth in our existing business.

         Interest Expense Interest expense increased 160% from $902,000 for the
year ended December 31, 1998 to $2.3 million for the year ended December 31,
1999. As a percentage of revenues, interest expense increased to approximately
4.8% for the year ended December 31, 1999 from approximately 3.7% for the year
ended December 31, 1998. The increases are due to higher utilization of our bank
line of credit for acquisition purposes and working capital needs.

         Other Income (Expense). For the year ended December 31, 1998, there was
other income of $15,000 as compared to $102,000 of other income for the year
ended December 31, 1999.

         Extraordinary Items. For the year ended December 31, 1999, we reported
an extraordinary loss of $256,000, net of income tax benefit of $171,000. This
extraordinary loss resulted from the extinguishment of indebtedness in
connection with the refinancing of our credit facility.

         In addition, for the year ended December 31, 1999, we recorded an
expense of $121,000 relating to the effect of changing our accounting method for
organization costs from deferral to expensing these costs as incurred.

         Income Taxes. For the year ended December 31, 1998, we had an income
tax expense of $45,000, as compared to an income tax benefit of $1.2 million for
the year ended December 31, 1999. The benefit for 1999 was primarily
attributable to the decrease in the valuation allowance and recognition of
deferred tax benefits. At December 31, 1999, we had a net operating loss
carryforward of $3.2 million, which gives rise to substantially all of our gross
deferred tax asset. Certain limitations exist on the usage of the net operating
loss, but it is estimated that $1.7 million is available for utilization in
2000.


                                      -33-
<PAGE>   34

         Net Loss. Our net loss decreased 87% from $2.4 million for the year
ended December 31, 1998 to $317,000 for the year ended December 31, 1999. This
decrease was due primarily to increased margin on services provided and income
tax benefits recorded, offset by increased cost of indebtedness.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2000, we had available cash of approximately $12.2
million. Since our inception, we have primarily financed our operations through
commercial bank borrowings, the issuance of subordinated notes, and the sale of
preferred and common stock. Cash provided by and used in operations is primarily
derived from our contracts in process and changes in working capital. Cash used
in operations was approximately $10.5 million for the year ended December 31,
2000, approximately $6.2 million for the year ended December 31, 1999 and
approximately $3.4 million for the year ended December 31, 1998.

         Cash used in investing activities was approximately $7.0 million for
the year ended December 31, 2000, approximately $11.3 million for the year ended
December 31,1999 and approximately $3.9 million for the year ended December 31,
1998. Investing activities consist primarily of acquisitions, as well as capital
expenditures to support our growth.

         Cash provided by financing activities for the year ended December 31,
2000 was approximately $28.8 million. This consisted primarily of $62.7 million
received as net proceeds from the issuance of common stock in the initial public
offering, $19.0 million borrowed under our revolving credit agreement, offset by
repayment of $31.3 million borrowed under our revolving credit agreement, $13
million for repayment of our senior subordinated notes and $7.9 million to
redeem our Series D preferred stock. Cash provided by financing activities for
the year ended December 31, 1999, was approximately $18.2 million. This
consisted primarily of proceeds from the sale of subordinated notes and
preferred stock totaling $23.2 million and $15.2 million borrowed under our
revolving credit agreement, offset by repayment of our bank loans and costs
associated with refinancing of $12.6 million, repayment of various notes
totaling $6.0 million and cash restricted in escrow of $1.6 million. Cash
provided by financing activities for the year ended December 31, 1998, was
approximately $6.7 million.

         In September 2000, we amended our syndicated credit agreement with
Wachovia Bank, N.A. as agent retaining the amount available under the facility
at $35 million and converting the entire facility to a revolving credit
facility. The credit facility is due November 1, 2004, and bears interest based
on LIBOR plus a margin of up to 2.25%. The line of credit is secured by
substantially all of our business assets, is guaranteed by our subsidiaries and
is senior to approximately $4.5 million of subordinated indebtedness. The
maximum amount that may be borrowed under the revolving credit facility is
limited to a multiple of trailing earnings before income taxes, depreciation and
amortization (EBITDA). Accordingly our ability to borrow under this facility is
contingent upon EBITDA. The terms of the credit agreement include many covenants
and restrictions including but not limited to those discussed herein. Certain of
the terms require maintenance of specified levels of profitability and
debt-to-net worth and current


                                      -34-
<PAGE>   35

ratios. Under the terms of the credit agreement, we are required to provide the
lenders with periodic budgets, financial statements and public reports and
filings. Additionally, the covenants limit our ability to sell our assets or
merge with or acquire other businesses. The covenants also limit capital
expenditures and prohibit us from paying dividends on our common stock or
incurring additional indebtedness. As of December 31, 2000 and as of the date of
filing this report, we believe we are in compliance with all outstanding
financial and operational covenants. As of December 31, 2000, we had $2.9
million in outstanding borrowings under the credit facility.

         On February 9, 2001, o2wireless obtained a Promissory Note from South
Carolina Phone, LLC for the sum of approximately $6.1 million, to cover payment
for goods and services provided by o2wireless to South Carolina Phone, LLC
during 2000. Interest is payable on the Note from January 1, 2001 until paid, at
an annual rate of 9.5%. The principal sum of the Note, and all accrued, but
unpaid interest on the Note is due and payable on November 6, 2001, 270 days
after the date of issuance of the Note, or earlier subject to certain
conditions. The above amount of approximately $6.1 million was included as part
of our Contract Revenues Receivable at December 31, 2000.

         We believe that our cash equivalent balances and funds available under
our existing line of credit will be sufficient to satisfy our cash requirements
for at least the next 12 months. The estimates for the periods for which we
expect our available cash balances and credit facilities to be sufficient to
meet our capital requirements are forward-looking statements that involve risks
and uncertainties as set forth under the caption "Risk Factors" in Item 1 of
this report on Form 10-K. Our capital requirements will depend on numerous
factors, including the demand for our suite of services, commercial acceptance
of new service offerings, possible acquisitions of complementary businesses or
technologies, and the resources we dedicate to new technologies and new
markets.

         We may need to raise additional capital if we expand more rapidly than
initially planned, to develop new technologies and/or services, to respond to
competitive pressures or to acquire complementary businesses or technologies. If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of our shareholders will be reduced, our
shareholders may experience additional dilution and such securities may have
rights, preferences or privileges senior to those of our shareholders. There can
be no assurance that additional financing will be available or on terms
favorable to us. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our expansion, take advantage of
unanticipated opportunities, expand our suite of services or otherwise respond
to competitive pressures could be significantly limited. Our business may be
harmed by such limitations.

RECENT DEVELOPMENTS

         On January 2, 2001, we completed the acquisition of all of the
outstanding stock of Young & Associates, Inc. a Nevada corporation headquartered
in San Diego, California. Young


                                      -35-
<PAGE>   36

& Associates is an independent provider of site development and consulting
services to the wireless telecommunications industry. Young & Associates offers
a full range of site development services to the telecommunications and data
industry, which include specialized mobile radio cellular, personal
communications services and other wireless telecommunications. Consideration for
the acquisition consisted of $9,684,500 in cash drawn from our line of credit
and 314,044 shares of o2wireless common stock.

         During the first quarter of 2001 the Company continued to assess its
cost and organizational structure. The Company is realigning its business units
and streamlining its cost structures to achieve profitability. As a result of
the realignment the Company may incur charges in the first quarter of 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 133 Accounting for Derivative Instruments and Hedging
Activities. This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. In June 1999, the FASB issued SFAS
No. 137, which postpones the mandatory adoption date of SFAS No. 133 by us until
January 1, 2001.

         SFAS No. 133 requires that all derivatives be recognized on the balance
sheet at their fair value. On the date the derivative contract is entered into,
SFAS No. 133 requires that we designate the derivative as (i) a fair value
hedge, (ii) a cash flow hedge, (iii) a foreign currency hedge, (iv) a hedge from
a net investment in a foreign operation, or (v) a trading instrument. We have
entered into an interest rate swap agreement which we have classified as a cash
flow hedge. We do not have any other derivative instruments and do not expect
that the adoption of SFAS No. 133 effective January 1, 2001 will have a
significant effect on our consolidated financial position or results of
operations.

         In March 2000, the FASB issued Interpretation No. 44, Accounting for
Certain Transactions involving Stock Compensation (FIN No. 44). FIN No. 44
clarifies the application of APB Opinion No. 25, Accounting for Stock Issued to
Employees, to certain areas of stock based compensation. Among other issues, FIN
No. 44 clarifies the accounting consequences of a modification to the terms of a
fixed stock option award. FIN No. 44 is effective July 1, 2000 but covers
specific events, such as option repricing, which occurred after either December
15, 1998 or January 12, 2000.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         We are exposed to market risks from changes in interest rates that may
impact our financial position. In January 2000, we entered into an interest rate
swap agreement with our senior lender in accordance with our loan agreement. For
more information about the swap agreement, see note 7 to our consolidated
financial statements.


                                      -36-
<PAGE>   37

         Our revolving credit facility bears interest at LIBOR plus a margin of
up to 2.25%. Accordingly, changes in LIBOR, which is affected by changes in
interest rates in general, will affect the interest rate on our revolving credit
facility.

         We temporarily invest our excess cash in money market funds. Changes in
interest rates would not significantly affect the fair value of these cash
investments.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Our consolidated financial statements at December 31, 1999 and 2000
and the Report of KPMG LLP, Independent Accountants, are included in this
Report on Form 10-K on pages beginning F-1.

QUARTERLY OPERATING RESULTS

         The following tables present unaudited quarterly results, in dollars
and as a percentage of net revenue, for the eight quarters covering our two most
recently completed fiscal years reported in the financial statements and notes
thereto included in this report. We believe this information reflects all
adjustments necessary for a fair presentation of such information in accordance
with generally accepted accounting principles. Prior to becoming a public
company, we did not prepare financial statements on a quarterly basis.
Accordingly, revenue reported for fixed-price contracts for each quarter in 1999
and through June 30, 2000 using the percentage-of-completion method was based on
actual or estimated total contract costs available at the end of 1999 and June
30, 2000, respectively, as opposed to estimates at the end of each quarter. For
the quarters ended September 30, 2000 and December 31, 2000, revenues from
fixed-price contracts were reported based upon estimates of the total costs to
complete the contract made during and at the end of the quarter. As a result of
the above, future operating results may fluctuate more from quarter to quarter
than those shown below. In addition, it may not be meaningful to compare results
of operations for future quarters to those for quarters prior to June 30, 2000
and the results for any quarter are not necessarily indicative of results for
any future period.


                                      -37-
<PAGE>   38


<TABLE>
<CAPTION>
                                                                          QUARTER ENDED
                                --------------------------------------------------------------------------------------------------
                                MARCH 31,   JUNE 30,     SEP. 30,   DEC. 31      MARCH 31,      JUNE 30,      SEP. 30,     DEC. 31,
                                  1999        1999         1999       1999         2000          2000          2000          2000
                                --------    --------     --------   --------     ---------     ---------     ---------   ---------
STATEMENTS OF OPERATIONS                                                (in thousands)
 DATA:
<S>                             <C>         <C>          <C>        <C>          <C>           <C>           <C>         <C>
Revenues ......................  $ 5,459    $ 10,759     $  9,172   $  23,241    $  26,512     $  30,731     $  37,404   $  45,689
Cost of revenues ..............    4,384       8,354        6,725      16,148       18,698        21,939        26,424      32,562

Gross profit ..................    1,075       2,405        2,447       7,093        7,814         8,792        10,980      13,127
SG&A expenses .................    2,025       1,729        1,630       4,441        4,648         5,926         7,312       9,542


Operating (loss) income .......   (1,375)        230          372       1,848        2,244         1,796         2,617       2,368
Total other (expense) income ..     (293)       (725)        (566)       (657)     (14,773)       (1,290)         (638)       (279)

(Loss) income before income
  tax, extraordinary items and
  cumulative effect of change
  in accounting principle .....   (1,668)       (495)        (194)      1,191      (12,529)          506         1,979       2,089

Income tax (benefit) expense ..       --          --       (1,567)        341          519           250         1,908         422

Extraordinary items ...........       --          --           --        (256)          --            --        (4,294)         --

Net (loss) income..............   (1,668)       (616)       1,373         594      (13,048)          256        (4,223)      1,667

Net (loss) income per common
 share
 Basic ........................  $ (0.25)   $  (0.10)    $   0.17   $    0.04    $   (1.88)    $   (0.03)    $   (0.56)  $    0.06
 Diluted ......................  $ (0.25)   $  (0.10)    $   0.08   $    0.03    $   (1.88)    $   (0.03)    $   (0.56)  $    0.05

AS A PERCENTAGE OF REVENUES:

Revenues ......................    100.0%      100.0%       100.0%      100.0%       100.0%        100.0%        100.0%      100.0%
Cost of revenues ..............     80.3%       77.6%        73.3%       69.5%        70.5%         71.4%         70.6%       71.3%

Gross profit (loss) ...........     19.7%       22.4%        26.7%       30.5%        29.5%         28.6%         29.4%       28.7%
SG&A expenses .................     37.1%       16.1%        17.8%       19.1%        17.5%         19.3%         19.5%       20.9%

Operating  (loss) income ......    (25.2%)       2.1%         4.1%        7.9%         8.5%          5.8%          7.0%        5.2%
Total other (expense) income ..     (5.4%)      (6.7%)       (6.2%)      (2.8%)      (55.7%)        (4.2%)        (1.7%)      (0.6%)

(Loss) income before income
  tax extraordinary items and
  cumulative effect of change
  in accounting principle......    (30.6%)      (4.6%)       (2.1%)       5.1%       (47.2%)         1.6%          5.3%        4.6%

Income tax (benefit) expense ..       --          --        (17.1%)       1.5%         2.0%          0.8%          5.1%        0.9%

Extraordinary items ...........       --          --           --        (1.1%)         --            --         (11.5%)        --

Net (loss) income .............    (30.6%)      (4.6%)       15.0%        2.6%       (49.2%)         0.8%        (11.3%)       3.6%
</TABLE>


                                      -38-
<PAGE>   39




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         There has been no occurrence requiring a response to this Item.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information relating to directors and executive officers of the
Company contained in the Company's definitive proxy statement to be delivered to
shareholders in connection with the 2001 Annual Meeting of Shareholders
scheduled to be held May 24, 2001 is incorporated herein by reference. The name,
age and position of each executive officer of the Company is set forth under the
heading "Executive Officers" in Item 1 of this Report.

ITEM 11.  EXECUTIVE COMPENSATION.

         The information relating to executive compensation contained in the
Company's definitive proxy statement to be delivered to shareholders in
connection with the 2001 Annual Meeting of Shareholders scheduled to be held May
24, 2001 is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information relating to security ownership of certain beneficial
owners and management contained in the Company's definitive proxy statement to
be delivered to shareholders in connection with the 2001 Annual Meeting of
Shareholders scheduled to be held May 24, 2001 is incorporated herein by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information relating to related party transactions contained in the
registrant's definitive proxy statement to be delivered to shareholders in
connection with the 2001 Annual Meeting of Shareholders scheduled to be held May
24, 2001 is incorporated herein by reference.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)      Financial Statements

         The following financial statements and accountants' reports have been
filed as Item 8 in Part II of this Report:

         Independent Auditors' Report
         Consolidated Balance Sheets - December 31, 1999 and 2000
         Consolidated Statements of Operations - Years ended December 31, 1998,
         1999 and 2000



<PAGE>   40
         Consolidated Statements of Stockholders' Equity (Deficit) - Years ended
         December 31, 1998, 1999 and 2000

         Consolidated Statements of Cash Flows - Years ended December 31, 1998,
         1999 and 2000
         Notes to Consolidated Financial Statements


(b)      Financial Statement Schedule

         Financial Statement Schedule

              Report of Independent Auditors' on Financial Statement Schedule
              Schedule II - Valuation and Qualifying Accounts




c)       Exhibits.
         --------

         The following exhibits are filed with or incorporated by reference into
this report. The exhibits which are denominated by an asterisk (*) were
previously filed as a part of, and are hereby incorporated by reference from
either (i) a Registration Statement on Form S-1 for the Registrant, Registration
No. 333-36678 (referred to as "S-1"), (ii) the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2000 ("10-Q") or (iii) the
Registrant's Current Report on Form 8-K as filed on January 17, 2001 ("8-K").
Except as otherwise indicated, the exhibit number corresponds to the exhibit
number in the referenced document.




<PAGE>   41




<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBIT
-------           -------------------------
<S>     <C>       <C>

2.1*     -        Stock Purchase Agreement, dated August 20, 1999, by and among
                  o2wireless Solutions, Clear Communications Group, Inc., George
                  A. Jackson and the TWR Family of Companies, LLC for the
                  purchase and sale of all of the issued and outstanding capital
                  stock of TWR Telecom, Inc. and Specialty Drilling, Inc., as
                  amended.( Exhibit 2.2 to S-1)

2.2*     -        Asset Purchase Agreement dated, November 1, 1999, by and among
                  o2wireless Solutions (formerly Clear Holdings, Inc.), Clear
                  Communications Group, Inc., McKenzie Telecommunications Group,
                  Inc. and Rhonda McKenzie for the purchase and sale of
                  substantially all of the assets of McKenzie Telecommunications
                  Group, Inc. (Exhibit 2.3 to S-1)

2.3*     -        Stock Purchase Agreement, dated as of June 15, 2000, by and
                  among o2wireless Solutions, Clear Communications Group, Inc.,
                  Communication Consulting Services, Inc. and John J. Meyer and
                  Clyde C. Smith for the purchase and sale of all of the issued
                  and outstanding capital stock of Communication Consulting
                  Services, Inc. (Exhibit 2.4 to S-1)

2.4*     -        Stock Purchase Agreement, dated January 2, 2001, by and among
                  o2wireless Solutions, Inc., o2wireless, Inc. and Jeffrey D.
                  Young for the purchase and sale of all of the issued and
                  outstanding capital stock of Young & Associates, Inc. (8-K)

3.1      -        Second Amended and Restated Articles of Incorporation of
                  o2wireless Solutions filed and effective August 18, 2000.

3.2      -        Amended and Restated Bylaws of o2wireless Solutions effective
                  as of August 15, 2000.

4.1*     -        Specimen Common Stock Certificate. (S-1)

4.2      -        See Exhibits 3.1 and 3.2 for provisions of the Second Amended
                  and Restated Articles of Incorporation, as amended, and Bylaws
                  of o2wireless Solutions defining rights of the holders of the
                  common stock of o2wireless Solutions.

4.3*     -        Amended and Restated Credit Agreement, dated September 29,
                  2000, by and among o2wireless, Inc. (formerly Clear
                  Communications Group, Inc.), o2wireless Solutions (formerly
                  Clear Holdings, Inc.), TWR Telecom, Inc., TWR Lighting, Inc.,
                  Rooker Tower Company, Clear Program Management, Inc.,
                  Specialty Drilling, Inc., Cellular Technology International,
                  Inc., Communications Development Systems, Inc., Clear Tower
                  Corporation, ISDC, Inc., Communications Consulting Services,
                  Inc. and various lenders and Wachovia Bank, N.A. (10-Q)

4.4*     -        Note and Equity Purchase Agreement, dated November 1, 1999, as
                  amended, by and among Clear Communications Group, Inc.,
                  o2wireless Solutions (formerly Clear Holdings, Inc.), TWR
                  Telecom, Inc., TWR Lighting, Inc., Rooker Tower Company, Clear
                  Program Management, Inc., Specialty Drilling, Inc., Cellular
                  Technology International, Inc., Communications Development
                  Systems, Inc., Clear Tower Corporation, ISDC, Inc., and
                  American Capital Strategies, Ltd. (Exhibit No. 4.10 to S-1)
</TABLE>


<PAGE>   42

<TABLE>
<S>     <C>       <C>
4.5*     -        Form of Common Stock Purchase Warrant, dated November 1, 1999,
                  issued to American Capital Strategies, Ltd. by o2wireless
                  Solutions (formerly Clear Holdings, Inc.). (Exhibit No. 4.11
                  to S-1)

10.1*    -        1998 Stock Option Plan, as amended. (S-1)

10.2*    -        Form of Incentive Stock Option Agreement pursuant to the 1998
                  Stock Option Plan, as amended. (S-1)

10.3*    -        Registration Rights Agreement, dated November 1, 1999, by and
                  among Stratford Capital Partners, L.P., Stratford Equity
                  Partners, L.P., RJB Management Company, Inc., DFW Capital
                  Partners, L.P., Lisa Roumell, Mark Rosenthal, Donald DeMuth,
                  Mark Malick, Andrew Roscoe, Hofe Family Limited Partnership,
                  Clear Investors, LLC, Stephen F. Johnston, Sr. and o2wireless
                  Solutions (formerly Clear Holdings, Inc.). (Exhibit No. 10.5
                  to S-1)

10.4*    -        Registration Rights Agreement dated November 1, 1999 by and
                  among Clear Communications Group, Inc., o2wireless Solutions
                  (formerly Clear Holdings, Inc.), TWR Telecom, Inc., TWR
                  Lighting, Inc., Rooker Tower Company, Clear Program
                  Management, Inc., Specialty Drilling, Inc., Cellular
                  Technology International, Inc., Communications Development
                  Systems, Inc., Clear Tower Corporation, ISDC, Inc., and
                  American Capital Strategies, Ltd. (included as Article 11 to
                  Exhibit 4.4).

21.1     -        List of Subsidiaries.

23.1     -        Consent of KPMG LLP
</TABLE>


(d)      Reports on Form 8-K. No reports on Form 8-K were filed during the
         quarter ended December 31, 2000.




<PAGE>   43




                                   SIGNATURES

         In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, in the City of Atlanta, State of
Georgia on March 16, 2001.

                                         O2WIRELESS SOLUTIONS, INC.


                                         By:      /s/ Stephen F. Johnston, Sr.
                                            ------------------------------------
                                              Stephen F. Johnston, Sr.
                                              Chairman of the Board and Chief
                                              Executive Officer


          Pursuant to the requirements of the Securities Exchange Act of 1934,
 this Report has been signed by the following persons on behalf of the
 Registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                Signature                                 Title                       Date
                ---------                                 -----                       ----
<S>                                         <C>                                   <C>

 /s/ Stephen F. Johnston, Sr.               Chairman of the Board and Chief       March 16, 2001
---------------------------------------     Executive Officer (principal          --------
Stephen F. Johnston, Sr.                    executive officer) and Director


 /s/ William J. Loughman                    Executive Vice President,             March 16, 2001
---------------------------------------     Secretary, Treasurer and Chief        --------
William J. Loughman                         Financial Officer (principal
                                            financial and accounting officer)


 /s/ Michael W. Riley                       President,  Chief Operating           March 16, 2001
---------------------------------------     Officer and Director                  --------
Michael W. Riley


 /s/ John Farmer                            Director                              March 16, 2001
---------------------------------------                                           --------
John Farmer


 /s/ Robert J. Lambrix                      Director                              March 16, 2001
---------------------------------------                                           --------
Robert J. Lambrix
</TABLE>


<PAGE>   44

<TABLE>
<CAPTION>
                Signature                                 Title                       Date
                ---------                                 -----                       ----
<S>                                         <C>                                 <C>

 /s/ Andrew Roscoe                          Director                             March 16, 2001
---------------------------------------                                          --------
Andrew Roscoe


 /s/ Lisa Roumell                           Director                             March 16, 2001
---------------------------------------                                          --------
Lisa Roumell


 /s/ Darin Winn                             Director                             March 16, 2001
---------------------------------------                                          --------
Darin Winn
</TABLE>


<PAGE>   45

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----

<S>                                                                               <C>
O2WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES

Independent Auditors' Report                                                       F-2

Consolidated Balance Sheets as of December 31, 1999 and 2000                       F-3

Consolidated Statements of Operations for the Years Ended December 31,
1998, 1999 and 2000                                                                F-5

Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 1998, 1999 and 2000                                                   F-7

Consolidated Statements of Cash Flows for the Years Ended December 31,
1998, 1999 and 2000                                                                F-9

Notes to Consolidated Financial Statements                                        F-11
</TABLE>


<PAGE>   46

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
o2wireless Solutions, Inc.:

         We have audited the accompanying consolidated balance sheets of
o2wireless Solutions, Inc. and subsidiaries (the "Company") as of December 31,
1999 and 2000, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of o2wireless
Solutions, Inc. and subsidiaries as of December 31, 1999 and 2000 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.


                                             /s/ KPMG LLP

Atlanta, Georgia
March 23, 2001


                                      F-2
<PAGE>   47

                   O2WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 2000
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                            1999          2000
                                                                                         ----------    ----------

<S>                                                                                      <C>           <C>
ASSETS:
Current Assets:
     Cash and cash equivalents                                                           $      893     $   12,191
     Restricted cash                                                                          1,616             --
     Contract revenues receivable, net of allowance for doubtful accounts
        of $872 and $812 at December 31, 1999 and 2000, respectively                         19,879         50,922
     Costs and estimated earnings in excess of billings on uncompleted
        contracts                                                                             5,704         14,137
     Inventories, net of obsolescence reserve of $321 at December 31,
        1999 and 2000                                                                         1,081          2,904
     Deferred income taxes                                                                      403            343
     Other current assets                                                                       460          1,027
                                                                                         ----------     ----------
          Total Current Assets                                                               30,036         81,524

Property and equipment, net of accumulated depreciation of $1,577 and
   $2,844 at December 31, 1999 and 2000                                                       5,002          4,994
Intangible assets, net                                                                       22,530         27,258
Deferred income taxes                                                                         1,339          2,277
Other assets                                                                                    566            236
                                                                                         ----------     ----------
                                                                                         $   59,473     $  116,289
                                                                                         ==========     ==========

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Affiliate notes payable, current portion                                            $      500     $    2,126
     Current portion of other indebtedness                                                    1,072            176
     Accrued earn-out                                                                         4,000          1,650
     Accounts payable                                                                         9,677         20,072
     Accrued expenses                                                                         1,858          9,377
     Billing in excess of costs and estimated earnings on uncompleted
        contracts                                                                               920          3,748
                                                                                         ----------     ----------
          Total Current Liabilities                                                          18,027         37,149

Affiliate notes payable, less current portion                                                   767          1,626
Other long-term indebtedness, less current portion                                           23,692          3,459
Common stock put warrants                                                                     9,031             --
Other long term liability                                                                        --            380
                                                                                         ----------     ----------
         Total Liabilities                                                                   51,517         42,614
                                                                                         ----------     ----------
</TABLE>


                                      F-3
<PAGE>   48

<TABLE>
<S>                                                                                      <C>            <C>
Redeemable preferred stock:
     Class A redeemable convertible preferred stock, $.01 par value; 100,000
         shares authorized; 56,817 shares issued and outstanding at
         December 31, 1999; redeemable at $100 per share                                      5,300             --
     Series C redeemable convertible preferred stock, no par value; 75,000
         shares authorized; 30,479 shares issued and outstanding
         at December 31, 1999;                                                                3,048             --
     Series D senior redeemable preferred stock, no par value; 100,000 shares
         authorized; 75,000 shares issued and outstanding at
         December 31, 1999;                                                                   2,612             --
                                                                                         ----------     ----------
                                                                                             10,960             --
                                                                                         ----------     ----------

Stockholders' equity (deficit):

     Serial preferred stock, no par value, 10,000,000 shares authorized; no
         shares issued or outstanding                                                            --             --
     Common stock, $.0001 par value 15,000,000 shares authorized and 7,189,230
         issued and outstanding at December 31, 1999, 100,000,000 shares
         authorized and 27,242,021 shares issued and outstanding at December 31,
         2000                                                                                    --              3
    Additional paid-in capital                                                                3,261         96,571
    Deferred stock compensation                                                                  --         (1,286)
    Accumulated deficit                                                                      (6,265)       (21,613)
                                                                                         ----------     ----------
     Total stockholders' equity (deficit)                                                    (3,004)        73,675

                                                                                         ----------     ----------
                                                                                         $   59,473     $  116,289
                                                                                         ==========     ==========
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-4
<PAGE>   49

                   O2WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                        1998          1999          2000
                                                                     ----------    ----------    ----------

<S>                                                                  <C>           <C>           <C>
Revenues                                                             $   24,485    $   48,631    $  140,336
                                                                     ----------    ----------    ----------
Operating  expenses:
  Cost of revenues                                                       19,523        35,611        99,623
  Selling, general, and administrative expenses                           5,035         9,825        27,428
  Depreciation and amortization                                           1,398         2,120         4,260
                                                                     ----------    ----------    ----------
    Operating  (loss) income                                             (1,471)        1,075         9,025

Other income (expense):
  Interest income                                                            15            20           274
  Interest expense                                                         (902)       (2,343)       (3,845)
  Increase in fair value of put warrants                                     --            --       (13,681)
  Other                                                                      --            82           272
                                                                     ----------    ----------    ----------
       Loss before taxes, extraordinary items and
         cumulative effect of change in accounting principle             (2,358)       (1,166)       (7,955)

Income tax expense (benefit)                                                 45        (1,226)        3,099
                                                                     ----------    ----------    ----------
      (Loss) income before extraordinary items and
         cumulative effect of change in accounting principle             (2,403)           60       (11,054)

Extraordinary item -- loss on extinguishment of
   indebtedness, net of income tax benefit of
   $171 in 1999 and $2,212 in 2000                                           --          (256)       (4,294)
                                                                     ----------    ----------    ----------
     Loss before cumulative effect of change
       in accounting principle                                           (2,403)         (196)      (15,348)

Cumulative effect of change from deferral of organization
   costs to expensing costs as incurred                                      --          (121)           --
                                                                     ----------    ----------    ----------
     Net loss                                                            (2,403)         (317)      (15,348)
Preferred stock dividends and accretion of discount on
   redeemable preferred stock                                              (413)         (632)       (6,148)
                                                                     ----------    ----------    ----------
    Net loss applicable to common stockholders                       $   (2,816)   $     (949)   $  (21,496)
                                                                     ==========    ==========    ==========
</TABLE>


                                      F-5
<PAGE>   50

<TABLE>
<S>                                                        <C>            <C>            <C>
Earnings per share data:

    Net loss per common share:
        Basic and diluted:
       Loss per share before extraordinary items
       and accounting change                               $     (0.40)   $     (0.08)   $     (1.15)
       Extraordinary items                                          --          (0.03)         (0.29)
       Accounting change                                            --          (0.02)            --
                                                           -----------    -----------    -----------
       Basic and diluted loss per common share             $     (0.40)   $     (0.13)   $     (1.44)
                                                           ===========    ===========    ===========

    Weighted-average common shares outstanding :
        Basic and diluted                                    7,107,968      7,188,700     14,980,193
                                                           ===========    ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-6
<PAGE>   51

                   O2WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                           Series B                                                                      Total
                                          Convertible      Common Stock          Additional   Deferred                Stockholders'
                                          Preferred    ---------------------      Paid-In      Stock     Accumulated    Equity
                                            Stock        Shares       Amount      Capital   Compensation  Deficit      (Deficit)
                                          -----------  ----------     ------     ---------- ------------ -----------  -------------

<S>                                       <C>          <C>            <C>        <C>        <C>          <C>          <C>
Balance at December 31, 1997                     --     7,047,710       --        $  3,596          --    ($ 3,545)     $     51
Purchase of Comdev                            1,550            --       --              --          --          --         1,550
Conversion of stockholder notes
   payable                                       --       140,990       --             294          --          --           294
Class A redeemable convertible
   preferred stock dividend                      --            --       --            (335)         --          --          (335)
Accretion of discount on Class A
   redeemable convertible preferred
   stock                                         --            --       --             (78)         --          --           (78)
Net loss                                         --            --       --              --          --      (2,403)       (2,403)
                                           --------    ----------       --        --------    --------    --------      --------
Balance at December 31, 1998                  1,550     7,188,700       --           3,477          --      (5,948)         (921)
Exercise of employee stock options               --           530       --               1          --          --             1
Class A redeemable convertible
    preferred stock dividend                     --            --       --            (347)         --          --          (347)
Conversion of Series B convertible
   preferred stock to notes payable          (1,550)           --       --              --          --          --        (1,550)
Series C convertible preferred
   stock dividend                                --            --       --             (88)         --          --           (88)
Accretion of discount on Class A
   redeemable  convertible preferred
   stock                                         --            --       --             (78)         --          --           (78)
Accretion of discount on Series D
   redeemable preferred stock                    --            --       --            (119)         --          --          (119)
Issuance of warrants for loan
   guarantees                                    --            --       --             415          --          --           415
Net loss                                         --            --       --              --          --        (317)         (317)
                                           --------    ----------       --        --------    --------    --------      --------
Balance at December 31, 1999                     --     7,189,230       --           3,261          --      (6,265)       (3,004)
Exercise of employee stock options               --     1,015,364       --             926          --          --           926
Expiration of fair value put feature
   upon initial public offering                  --     4,532,735        1          22,712          --          --        22,713
Class A redeemable convertible
   preferred stock dividend                      --            --       --            (172)         --          --          (172)
Series C convertible preferred
   stock dividend                                --            --       --             (92)         --          --           (92)
Series D redeemable preferred
   stock dividend                                --            --       --            (615)         --          --          (615)
</TABLE>


                                      F-7
<PAGE>   52

<TABLE>
<S>                                        <C>         <C>              <C>       <C>         <C>         <C>           <C>
Accretion of discount on Class A
   redeemable convertible preferred
   stock                                         --            --       --            (382)         --          --          (382)
Unaccreted discount on Series D
   redeemable convertible preferred
   stock upon redemption                         --            --       --          (4,887)         --          --        (4,887)
Conversion of Series A into
   Common Stock                                  --     5,575,116        1           5,766          --          --         5,767
Conversion of Series C into
   Common Stock                                  --     2,990,328       --           3,093          --          --         3,093
Initial public offering of common
   stock, net                                    --     5,798,623        1          62,742          --          --        62,743
Deferred stock compensation related
   to stock option grants                        --            --       --           1,809      (1,809)         --            --
Amortization of stock compensation               --            --       --              --         523          --           523
Issuance of common stock for
   acquisitions                                  --       140,625       --             805          --          --           805
Tax benefit on disqualified disposition
   of stock options                              --            --       --           1,605          --          --         1,605
Net loss                                         --            --       --              --          --     (15,348)      (15,348)
                                           --------    ----------       --        --------    --------    --------      --------
Balance at December 31, 2000                     --    27,242,021        3          96,571      (1,286)    (21,613)       73,675
                                           ========    ==========       ==        ========    ========    ========      ========
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-8
<PAGE>   53

                   O2WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            1998        1999        2000
                                                                          --------    --------    --------

<S>                                                                       <C>         <C>         <C>
Cash flows from operating activities:
   Net loss                                                               $ (2,403)   $   (317)   $(15,348)
   Adjustments to reconcile net loss to net cash
       used in operating activities:
       Depreciation and amortization                                         1,398       2,120       4,260
       (Gain) loss on disposal of fixed assets                                  (2)         --         104
       Accretion of loan discount                                               --          94         358
       Amortization of deferred stock-based compensation                        --          --         523
       Increase in fair value of common stock put warrants                      --          --      13,681
       Deferred income tax (benefit) expense                                    --      (1,239)      2,809
       Extraordinary loss - Loss on extinguishment of indebtedness              --         256       4,294
       Non-cash interest expense relating to warrants issuances                 --         415          --
       Write off of organization costs                                          --         121          --
       Changes in operating assets and liabilities:
       Contract revenues receivable                                         (1,077)     (9,852)    (29,213)
       Costs and estimated earnings in excess of billings
          on uncompleted contracts                                            (962)     (3,016)     (8,433)
       Inventories                                                              --          21      (1,765)
       Other current assets                                                    (26)        (92)       (567)
       Other assets                                                           (184)        (64)        335
       Accounts payable                                                      1,175       4,490      10,111
       Accrued expenses                                                       (339)        112       5,130
       Other long term liability                                                --          --         380
       Billings in excess of cost and estimated earnings
          on uncompleted contracts                                            (932)        715       2,828
                                                                          --------    --------    --------
     Net cash used in operating activities                                  (3,352)     (6,236)    (10,513)
                                                                          --------    --------    --------
Cash flows used in investing activities:
   Purchase of property and equipment                                         (465)     (1,469)     (1,631)
   Proceeds from fixed asset disposals                                          20          --          70
   Cash paid for acquisitions, net of cash acquired                         (3,470)     (9,834)     (5,471)
                                                                          --------    --------    --------
     Net cash used in investing activities                                  (3,915)    (11,303)     (7,032)
                                                                          --------    --------    --------

Cash flows from financing activities:
   Net proceeds from issuance of common stock                                   --          --      62,742
   Restricted cash held in escrow                                               --      (1,616)      1,616
</TABLE>


                                      F-9
<PAGE>   54

<TABLE>
<S>                                                                       <C>         <C>         <C>
   Repayment of notes payable converted from Series B
      preferred stock                                                           --      (1,550)         --
   Preferred stock dividends                                                    --          (1)       (331)
   Exercise of stock options and warrants                                       --           1         926
   Repayment of various notes payable                                       (2,603)     (4,434)     (2,875)
   Proceeds from (repayment of) Fleet Facility, net                          9,262      (9,750)         --
   Proceeds from borrowing under Wachovia Facility                              --      15,242      19,012
   Repayment of borrowings under Wachovia Facility                              --          --     (31,329)
   Repayment of preferred stock                                                 --          --      (7,918)
   Issuance of Series C convertible preferred stock                             --       2,961          --
   Issuance of Series D redeemable preferred stock and warrants                 --       7,197          --
   Issuance (repayment) of Tranche A notes and warrants                         --      13,000     (13,000)
   Payment of loan costs for refinancing                                        --      (2,803)         --
                                                                          --------    --------    --------
     Net cash provided by financing activities                               6,659      18,247      28,843
                                                                          --------    --------    --------
Net (decrease) increase in cash and cash equivalents                          (608)        708      11,298

Cash and cash equivalents at beginning of period                               793         185         893
                                                                          --------    --------    --------
Cash and cash equivalents at end of period                                $    185    $    893    $ 12,191
                                                                          ========    ========    ========

Supplemental disclosure of cash flow information:
   Cash paid during the period for interest                               $    717    $  2,066    $  3,467
                                                                          ========    ========    ========

Non cash investing and financing activities:

   Conversion of stockholder notes to additional paid-in capital          $    295    $     --    $     --
                                                                          ========    ========    ========
   Conversion of Series B preferred stock to notes payable                $     --    $  1,550    $     --
                                                                          ========    ========    ========
   Expiration of fair value put feature upon initial public
      offering                                                            $     --    $     --    $ 22,712
                                                                          ========    ========    ========
   Conversion of preferred stock to common stock                          $     --    $     --    $  8,859
                                                                          ========    ========    ========
</TABLE>

See accompanying notes to consolidated financial statements


                                      F-10
<PAGE>   55
                           O2WIRELESS SOLUTIONS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

(A) ORGANIZATION AND BASIS OF PRESENTATION

         o2wireless Solutions, Inc. and subsidiaries (formerly Clear Holdings,
Inc. and subsidiaries) - (the "Company") is headquartered in Atlanta, Georgia.
On November 12 ,1997, Clear Communications Group, Inc. was merged into American
Communications Group, Inc. ("ACCI"), an affiliated company under common
control, and ACCI changed its name to Clear Communications Group, Inc. ("Clear
Group").

         The following is a summary of our significant acquisitions. In
November, 1997, Clear Group acquired all of the outstanding stock of ISDC, Inc.
("ISDC") and substantially all of the assets and liabilities of the
construction division of Minerich, Inc. ("Minerich"). During 1998, Clear Group
acquired all of the outstanding stock of Communications Development Systems,
Inc. ("Comdev"). In January, 1999, the Company acquired all of the outstanding
stock of Cellular Technology International, Inc. ("Cell Tech"), in a purchase
transaction. In November , 1999, the Company acquired all of the outstanding
stock of TWR Telecom, Inc., and its subsidiaries, and Specialty Drilling, Inc.,
collectively ("TWR Group"), in a purchase transaction. Also on this date, the
Company purchased substantially all of the assets and liabilities of McKenzie
Telecommunications Group, Inc. ("MTG"). In June, 2000, the Company, through its
subsidiary Clear Communications Group, Inc., acquired all of the issued and
outstanding common stock of Communication Consulting Services, Inc. ("CCS"). In
September, 2000, the Company purchased substantially all of the assets of
Wireless Sites Development, Inc. ("WSD"). In December, 2000, the Company
purchased all of the issued and outstanding share capital of HAF Limited
("HAF").

         The telecommunications market is characterized by significant risks as
a result of changes in technology, continued growth and outsourcing of
telecommunications networks, consolidation of equipment vendors and other
significant factors. The Company's ability to manage future expansion, manage
personnel levels and third-party subcontractors is critical to achieving
profitability. Changes in technology, economic conditions or the loss of one or
more of the Company's key customers, among other factors, could have a material
adverse effect on the Company's financial position and results of operations.
See Item 1. "Risk Factors."

(B) DESCRIPTION OF BUSINESS

         The Company provides comprehensive integrated network solutions to all
sectors of the global wireless telecommunications industry. This comprehensive
end-to-end solution enables the Company to address the current and emerging
network infrastructure requirements of their


                                      F-11
<PAGE>   56


                           O2WIRELESS SOLUTIONS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

customers. These solutions enable its customers to plan, design, deploy and
maintain their wireless networks. The Company also offers business planning and
consulting services to wireless telecommunications industry participants.


(C) PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the financial statements
of o2wireless Solutions, Inc. and its wholly owned subsidiaries from the
respective dates of acquisition. All significant intercompany balances and
transactions have been eliminated in consolidation.

(D) CONTRACT REVENUE AND COST RECOGNITION

         Revenue on time and materials contracts is recognized as services are
rendered. Revenue on fixed price contracts is recognized on the
percentage-of-completion method. Under the percentage-of-completion method, in
each period expenses are recognized as incurred and revenue is recognized based
on a comparison of the current costs incurred for the project to the then
estimated total costs of the project. Accordingly, the revenue recognized in a
given quarter depends on the costs incurred for individual projects and the
estimate of the total remaining costs to complete individual projects. These
estimates are reviewed on a contract-by-contract basis, and are revised
periodically throughout the life of the contract such that adjustments to the
results of operations relating to these revisions are reflected in the period of
revision. Estimated costs to complete a project are based on many factors.
Accordingly, the final project cost may vary from the original estimate. Certain
project costs can vary significantly from original estimates which may lead to
significant fluctuations in actual gross margin compared to projected margins.
As a result, gross margins in future periods may be significantly reduced, and
in some cases, a loss may be required to be recognized. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined.

         Contract costs include all direct materials, compensation and benefits,
living and travel expenses, payments to third-party sub-contractors and other
direct project-related expenses, and allocations of indirect overhead. Cost of
revenues excludes down-time for direct compensation and benefits, training and
other indirect overhead and related costs which are included in selling, general
and administrative expenses. Selling, general and administrative costs are
charged to expense as incurred.

Costs and estimated earnings in excess of billings on uncompleted contracts,
represents revenues recognized in excess of amounts billed. Billings in excess
of costs and estimated earnings on uncompleted contracts represents billings in
excess of revenues recognized.


                                      F-12
<PAGE>   57


                           O2WIRELESS SOLUTIONS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

(E) CASH EQUIVALENTS

         The Company considers all highly liquid financial instruments with
original maturities of three months or less to be cash equivalents.

(F) INVENTORIES

         Inventories are stated at the lower of cost or market. Cost is
determined using the average cost method for all inventories. The inventories
are primarily composed of raw materials for use in the manufacture of tower
lighting systems.

 (G) PROPERTY AND EQUIPMENT

         Property and equipment are recorded at cost and are depreciated using
the straight-line method over the estimated useful lives of the assets.
Significant additions which extend lives are capitalized. Normal maintenance
and repair costs are expensed as incurred.

(H) GOODWILL

          Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line basis over the
expected period of benefit, ranging from 5-10 years. The Company assesses the
recoverability of this intangible asset by determining whether the amortization
of the goodwill balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired operation. The amount
of goodwill impairment, if any, is measured based on projected discounted
future operating cash flows using a discount rate reflecting the Company's
average cost of funds. The assessment of the recoverability of goodwill will be
impacted if estimated future operating cash flows are not achieved.

(I) OTHER INTANGIBLE ASSETS

         Other intangible assets represent wireless tower design rights, which
are amortized on a straight-line basis primarily over five years.

(J) ORGANIZATION COSTS

         Effective January 1, 1999, the Company adopted the American Institute
of Certified Public Accountants Statement of Position 98-5, Reporting on the
Costs of Start-up Activities ("SOP 98-5"), which requires that start-up costs
be expensed as incurred.


                                      F-13
<PAGE>   58


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

         Adoption of SOP 98-5 required the write-off of $121,000 in 1999,
related to previously capitalized and unamortized organization costs.

(K) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

         The Company reviews long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of the asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amounts of the assets exceed the fair values of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell.

(L) INCOME TAXES

         The Company uses the asset and liability method to account for income
taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(M) STOCK OPTION PLANS

         The Company accounts for its stock option plans in accordance with the
provisions of Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation ("SFAS No. 123"). SFAS No. 123 encourages
companies to recognize as expense over the vesting period the fair value of all
stock-based awards on the grant date. Alternatively, SFAS No. 123 allows
entities to apply the provisions of Accounting Principles Board Opinion No. 25
Accounting for Stock Issued to Employees, ("APB No. 25") and related FIN No.
44, and provide pro forma net earnings and pro forma earnings per share
disclosures as if the fair-value-based method defined in SFAS No. 123 had been
applied. In accordance with APB No. 25, and related interpretations,
compensation expense is generally only recorded to the extent that the market
price of the underlying stock at the date of grant exceeds the exercise price.
The Company has elected to apply the provisions of APB No. 25 and provide the
pro forma disclosures required by SFAS No. 123.


                                      F-14
<PAGE>   59


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

(N) EARNINGS (LOSS) PER SHARE

         The Company calculates earnings (loss) per share in accordance with
SFAS No. 128, Earnings Per Share. Under SFAS No. 128, basic earnings (loss) per
share is determined by dividing net earnings (loss) applicable to common
stockholders by the weighted average common shares outstanding during the
period. Diluted earnings (loss) per share reflects the effects of potentially
dilutive securities and other common stock equivalents. Due to losses
applicable to common stockholders, potentially dilutive securities and other
common stock equivalents are not included in the computation of diluted per
share amounts as the effects would be anti-dilutive. Potential weighted average
shares of common stock excluded from the computation of diluted per share
amounts because their effects would be anti-dilutive approximated 4,656,000,
17,452,000 and 11,893,000 for the years ended December 31, 1998, 1999, and
2000. As of December 31, 2000, potential dilutive securities and other common
stock equivalents not included in the computation of diluted per share amounts
because their effects would be anti-dilutive approximated 4,038,000.

(O) COMMON STOCK PUT WARRANTS

         Common stock put warrants issued by the Company allow the holders to
sell back to the Company at fair value any stock purchased under the warrants
at various dates in accordance with the respective agreements, subject to a
maximum redeemable value of approximately $22.7 million. Accordingly, the
warrants are considered liabilities and are recorded at fair value in the
accompanying consolidated balance sheets. The fair value of the warrants was
determined using the Black-Scholes pricing model. Any changes in fair value
during the period are recorded as components of the results of operations. The
put feature on all common stock put warrants expired during 2000. Accordingly,
the liability was reclassified to stockholders' equity.

(P) USE OF ESTIMATES

         Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities as of the balance sheet date
and revenues and expenses during the reporting period to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ significantly from those estimates.

(Q) COMPREHENSIVE INCOME

         On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130").
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income or loss and its components in


                                      F-15
<PAGE>   60


                           O2WIRELESS SOLUTIONS INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

a full set of financial statements. Comprehensive income or loss consists of
net income or loss and all other gains and losses that are excluded from net
income by current accounting standards, and is presented in the statement of
stockholders' equity. SFAS No. 130 requires only additional disclosures in the
financial statements and does not affect the Company's financial position or
results of operations. The Company has no "other" comprehensive income or loss
to report for the years ended December 31, 1998, 1999, or 2000.

(R) FAIR VALUE OF FINANCIAL INSTRUMENTS

         SFAS No. 107, Disclosure About Fair Value of Financial Instruments,
requires that fair values be disclosed for the Company's financial instruments.
The carrying amounts of cash, accounts receivable, accounts payable and accrued
expenses, approximate fair value due to the short-term nature of these
instruments. The carrying amounts reported for the Company's line of credit and
notes payable to banks approximate their fair value because the underlying
instruments bear interest at rates and terms comparable to current terms
offered to the Company for instruments of similar risk. The fair values of
affiliate notes payable and senior subordinated notes payable are not estimable
due to their related party nature.

(S) SEGMENT REPORTING

         SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures about its products,
services, geographic areas, and major customers. An operating segment is
defined as a component of an enterprise that engages in business activities
from which it may earn revenues and incur expenses, and about which separate
financial information is regularly evaluated by the chief operating decision
maker in deciding how to allocate resources. The Company operates and manages
its business as a single segment.

(T) NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
This statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. In June 1999, the FASB issued SFAS No.
137, which postpones the mandatory adoption date of SFAS No. 133 by the Company
until January 1, 2001.

         SFAS No. 133 requires that all derivatives be recognized on the
balance sheet at their fair value. On the date the derivative contract is
entered into, SFAS No. 133 requires that the Company designate the derivative
as (i) a fair value hedge, (ii) a cash flow hedge, (iii) a foreign


                                      F-16
<PAGE>   61


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES - (CONTINUED)

currency hedge, (iv) a net hedge of an investment in a foreign operation, or
(v) a trading instrument. The Company has entered into an interest rate swap
agreement which it classifies as a cash flow hedge. The Company does not have
any other derivative instruments and does not expect that its adoption of SFAS
No. 133 on January 1, 2001 will have a significant effect on its consolidated
financial position or results of operations.

         In March 2000, the FASB issued FASB Interpretation No. 44, Accounting
for Certain Transactions involving Stock Compensation ("FIN No. 44"). FIN No.
44 clarifies the application of APB No. 25, Accounting for Stock Issued to
Employees, to certain areas of stock based compensation. Among other issues,
FIN No. 44 clarifies the accounting consequences of a modification to the terms
of a fixed stock option award. FIN No. 44 is effective July 1, 2000 but covers
specific events, such as option repricing, which occurred after either December
15, 1998 or January 12, 2000. During 1999, the Company repriced certain
employee incentive stock options. The options were all exercised on or before
August 16, 2000.

(U) RECLASSIFICATIONS

         Certain amounts in the 1998 and 1999 consolidated financial statements
have been reclassified to conform with the presentation adopted in 2000.

2. ACQUISITIONS

         (a) In November 1997, the Company issued 812,416 shares of its common
stock at a price of $1.722 (the original conversion price of the Class A Stock)
for a purchase price of $1.4 million in exchange for all of the outstanding
shares of ISDC. The Company also incurred $97,000 in acquisition costs. ISDC,
located in Frederick, Maryland, provides engineering, project management, and
construction services for wireless communications site development. The excess
of purchase price over the fair value of the net assets acquired was $1.6
million and has been recorded as goodwill. Pursuant to the merger agreement,
notes payable totaling $619,000 in November 1997 assumed from ISDC in
connection with the purchase were satisfied in full on September 15, 1998. Also
in November, 1997, Clear Group acquired substantially all the assets and
liabilities of Minerich for a total purchase price of $6.7 million. The
purchase price consisted of $4.7 million in cash, a $2.0 million note payable
to Minerich, Inc. (note 6) and $77,000 in acquisition costs. Minerich, located
in Richmond, Kentucky, provides engineering, project management, and
construction services for wireless communications site development. The assets
acquired included wireless tower design rights valued at $750,000. The excess
of purchase price over the fair value of the net assets acquired was $2.6
million and has been recorded as goodwill.


                                      F-17
<PAGE>   62


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. ACQUISITIONS - (CONTINUED)

         The acquisitions of ISDC and Minerich have been accounted for under
the purchase method of accounting and, accordingly, the results of operations
were recorded from the respective dates of acquisition.

         The fair values of the assets purchased and the liabilities assumed by
the Company are set forth below: (in thousands of dollars)


<TABLE>
<S>                                                               <C>
Current assets                                                    $ 4,158
Property and equipment                                              1,968
Intangibles                                                           750
Goodwill                                                            4,245
Liabilities assumed                                                (2,891)
                                                                  -------
Purchase price of ISDC and Minerich                               $ 8,230
                                                                  =======
</TABLE>

         (b) In June 1998, the Company purchased all of the issued and
outstanding shares of Comdev for a total purchase price of $5.2 million. The
purchase price consisted of $3.5 million in cash, $1.6 million in Series B
convertible preferred stock (note 10) and $147,000 in acquisition costs.
Comdev, located in West Caldwell, New Jersey, provides project management and
construction services for wireless communications site development. The excess
of purchase price over the fair value of the net assets acquired was $4.9
million and has been recorded as goodwill.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations were recorded from the
date of acquisition.

         The fair value of the assets purchased and the liabilities assumed in
the Comdev acquisition are set forth below: (in thousands of dollars)


<TABLE>
<S>                                                                <C>
Current assets                                                     $   963
Property and equipment                                                 120
Goodwill                                                             4,879
Liabilities assumed                                                   (755)
                                                                   -------
Purchase price of Comdev                                           $ 5,207
                                                                   =======
</TABLE>

         (c) In January 1999, the Company purchased all of the issued and
outstanding shares of Cell Tech, a Charlotte, North Carolina based company, for
a total initial purchase price of $1.7 million. The initial purchase price
consisted of $1.4 million in cash and $299,000 of acquisition costs. An
earn-out payment of up to $5.0 million subject to certain adjustments as
defined in the purchase agreement, was required. The Company accrued an
additional $4 million of goodwill for this earn-out payment as of December 31,
1999, based on management's estimate of the


                                      F-18
<PAGE>   63


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. ACQUISITIONS - (CONTINUED)

amount to be paid.

On May 24, 2000 the Company paid $400,000 in cash and issued a promissory note
in the amount of $4.1 million to the sellers in settlement of the earn-out and
increased goodwill another $500,000 (note 6). The note bears interest at the
prime rate and is payable in eight equal quarterly installments plus interest
beginning on July 1, 2000.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
January, 1999.

         The fair values of the assets purchased and the liabilities assumed in
the Cell Tech acquisition are set forth below: (in thousands of dollars)


<TABLE>
<S>                                                               <C>
Current assets                                                    $ 2,213
Property and equipment                                                 45
Goodwill                                                              177
Liabilities assumed                                                  (750)
                                                                  -------
Initial purchase price of Cell Tech                               $ 1,685
                                                                  =======
</TABLE>

         (d) In November, 1999, the Company purchased all of the issued and
outstanding shares of TWR Group, Houston, a group of Texas based companies, for
an initial purchase price of $10.1 million. The initial purchase price consisted
of $9.9 million in cash and $181,000 of acquisition costs. An earn-out payment
of up to $3.3 million may be required based on the excess of EBITDA of the TWR
Group, over $3.5 million if any, for the fiscal year ended December 31, 1999. As
of December 31, 2000, the Company has accrued approximately $1.7 million for the
potential earn-out payment, which has been recorded to goodwill. An additional
deferred payment of $2.3 million was also accrued as of December 31, 2000, and
charged to goodwill. This amount was paid one-third in cash and two-thirds in
common stock of the Company, in January 2001.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
November 1999.

         All future earn-out and additional payments, if any, will be recorded
as additional goodwill and amortized over the remaining life.

         The purchase price was allocated to the assets purchased and the
liabilities assumed based upon the fair values determined by the Company as set
forth below: (in thousands of dollars)


                                      F-19

<PAGE>   64


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. ACQUISITIONS - (CONTINUED)


<TABLE>
<S>                                                              <C>
Current assets                                                    $ 7,263
Property and equipment                                              2,157
Initial Goodwill                                                    6,286
Liabilities assumed                                                (5,617)
                                                                  -------
Initial purchase price of TWR Group                               $10,089
                                                                  =======
</TABLE>

         (e) Also in November 1999, the Company purchased substantially all of
the assets and liabilities of MTG, a Phoenix, Arizona company, for an initial
purchase price of $269,000. The initial purchase price consisted of $200,000 in
cash, and $69,000 of acquisition costs. An earn-out payment based on the excess
of fiscal year 2000 EBITDA over a predetermined amount is payable the first
year following closing. The earn-out is payable in common stock of the Company.
The Company continues to negotiate with the seller and is currently unable to
estimate the amount of the earn-out, if any, that will be paid.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
November, 1999.

         Any future payments will be recorded as additional goodwill and
amortized over the remaining life.

         The purchase price was allocated to the assets purchased and the
liabilities assumed based upon the fair values determined by the Company as set
forth below:


<TABLE>
<S>                                                          <C>
Current assets                                               $   441
Property and equipment                                            10
Goodwill                                                       1,557
Liabilities assumed                                           (1,739)
                                                             -------
Initial purchase price of MTG                                $   269
                                                             =======
</TABLE>

         (f) In June 2000, the Company acquired all of the issued and
outstanding common stock of Communication Consulting Services, Inc. a Chicago,
Illinois based company, ("CCS"), for an initial purchase price of $2.3 million.
The initial purchase price consisted of $2.3 million in cash, and $94,000 of
acquisition costs.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
June 2000.


                                      F-20
<PAGE>   65
                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. ACQUISITIONS - (CONTINUED)

The purchase price was allocated to the assets purchased and the liabilities
assumed based upon the fair values determined by the Company as set forth
below: (in thousand of dollars)


<TABLE>
<S>                                                    <C>
Current assets                                         $  1,114
Property and equipment                                       67
Goodwill                                                  1,487
Liabilities assumed                                        (324)
                                                       --------
Initial purchase price of CCS                          $  2,344
                                                       ========
</TABLE>

         (g) In September 2000, the Company purchased substantially all of the
assets of Wireless Sites Development, Inc., a New Jersey based company ("WSD"),
for a purchase price of $310,000. The purchase price consisted of $50,000 in
cash, a note payable for $250,000 (note 6) and $10,000 of acquisition costs.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
September 2000.

         The purchase price was allocated to the assets purchased and the
liabilities assumed based upon the fair values determined by the Company as set
forth below:


<TABLE>
<S>                                                       <C>
Current assets                                            $   58
Property and equipment                                        39
Goodwill                                                     266
Liabilities assumed                                          (53)
                                                          ------
Initial purchase price of WSD                             $  310
                                                          ======
</TABLE>

         (h) In October 2000, the Company purchased all of the shares of
Cardinal Engineering Corporation, a North Carolina based company, for a
purchase price of $182,000. The purchase price consisted of $170,000 in cash
and $12,000 of acquisition costs.

         The acquisition has been accounted for under the purchase method of
accounting.

         The purchase price was allocated to the assets purchased and the
liabilities assumed based upon the fair values determined by the Company as set
forth below: (in thousands of dollars)


                                      F-21
<PAGE>   66


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. ACQUISITIONS - (CONTINUED)

<TABLE>
<S>                                                               <C>
Goodwill                                                          $  182
                                                                  ------

Purchase price of Cardinal Engineering                            $  182
                                                                  ======
</TABLE>

         (i) In December 2000, the Company purchased substantially all of the
issued and outstanding Share Capital of HAF Limited, a United Kingdom based
company, for a purchase price of $4.3 million. The purchase price consisted of
$2.9 million in cash, $805,000 in common stock of the Company, a note payable
for $450,000 (note 6) and $121,000 of acquisition costs. The Company may, but
is not required to, make a Section 338 election for income tax purposes which
would require an additional payment to the seller for an increase in the
Company's income tax basis. Any additional payments would increase goodwill.

         The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations have been included since
December 2000.

         The purchase price was allocated to the assets purchased and the
liabilities assumed based upon the fair values determined by the Company as set
forth below: (in thousands of dollars)


<TABLE>
<S>                                          <C>
Current assets                               $   389
Property and equipment                            --
Goodwill                                       4,155
Liabilities assumed                             (243)
                                             -------
Purchase price of HAF                        $ 4,301
                                             =======
</TABLE>

         (j) Unaudited pro forma results of operations (in thousands, except
per share data) for the years ended December 31, 1999 and 2000, assuming the
1999 and 2000 acquisitions occurred as of January 1, 1999 are as follows: (in
thousands of dollars)


<TABLE>
<CAPTION>
                                                                         1999                       2000
                                                                       --------                   ---------

<S>                                                                    <C>                        <C>
Revenues                                                               $ 75,835                   $ 145,159
Loss before extraordinary items and cumulative effect
   of change in accounting principle applicable to
   common stockholders                                                   (2,590)                     (8,407)
Net loss applicable to common stockholders                               (2,967)                    (21,163)
Net loss per share applicable to common
stockholders                                                           $  (0.41)                  $   (1.41)
                                                                       --------                   ---------
</TABLE>


                                      F-22
<PAGE>   67


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

3. CONTRACTS IN PROGRESS

         The Company's costs, earnings, and billings on uncompleted contracts
at December 31, 1999 and 2000 are as follows: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                         1999                       2000
                                                                       --------                   --------

<S>                                                                    <C>                        <C>
Costs incurred on uncompleted contracts                                $ 21,806                   $ 71,135
Estimated earnings                                                        6,031                     28,939
Less billings to date                                                   (23,053)                   (89,685)
                                                                       --------                   --------
   Total                                                               $  4,784                   $ 10,389
                                                                       ========                   ========

Included in the accompanying balance sheets:

Costs and estimated earnings in excess of billings on
   uncompleted contracts                                               $  5,704                   $ 14,137
Billings in excess of costs and estimated earnings on
   uncompleted contracts                                                   (920)                    (3,748)
                                                                       --------                   --------

   Total                                                               $  4,784                   $ 10,389
                                                                       ========                   ========
</TABLE>

4. PROPERTY AND EQUIPMENT

         Property and equipment consists of the following at December 31, 1999
and 2000: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                   ESTIMATED
                                                 USEFUL LIVES
                                                   IN YEARS                 1999                     2000
                                                 ------------             -------                   -------

<S>                                              <C>                      <C>                       <C>
Land                                                  --                  $   117                   $   117
Buildings                                             40                      635                       979
Leasehold improvements                              4 - 5                     110                       472
Vehicles                                            3 - 7                   2,435                     2,011
Furniture, fixtures, and equipment                  3 - 10                  3,282                     4,259
                                                                          -------                   -------
   Total property and equipment                                             6,579                     7,838
Less accumulated depreciation                                              (1,577)                   (2,844)
                                                                          -------                   -------
   Net property and equipment                                             $ 5,002                   $ 4,994
                                                                          =======                   =======
</TABLE>


                                      F-23
<PAGE>   68


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5. INTANGIBLE ASSETS

         Intangible assets at December 31, 1999 and 2000 consist of the
following: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                 ESTIMATED
                                                               USEFUL LIVES
                                                                 IN YEARS                 1999                     2000
                                                               ------------             -------                   -------

<S>                                                            <C>                      <C>                       <C>

Goodwill, net of accumulated amortization of $1,770
   and $4,026 for 1999 and 2000, respectively                     5 - 10                $19,375                   $26,971
Tower design rights, net of accumulated amortization
   of $313 and $463 for 1999 and 2000, respectively                 5                       437                       287
Loan organization costs, net of accumulated
amortization of $86                                               5 - 6                   2,718                        --
                                                                                        -------                   -------
                                                                                        $22,530                   $27,258
                                                                                        =======                   =======
</TABLE>

6. AFFILIATES NOTES PAYABLE

         Affiliates notes payable resulting from acquisitions are payable to the
sellers currently employed by the Company which consist of the following at
December 31, 1999 and 2000: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                                           1999             2000
                                                                                           ----             ----

<S>                                                                                      <C>               <C>
Note payable to Minerich, Inc. former shareholders' resulting from the
   acquisition of Minerich (note 2). The note, which bears interest at the prime
   rate (8.25% at December 31, 1999), was payable in 60 monthly principal
   payments of $33 plus interest, beginning on January 1, 1998. The note was
   fully repaid in 2000;                                                                  $1,267            $   --

Note payable to Cell Tech former shareholders' resulting from the acquisition of
   Cell Tech (note 2). The note, which bears interest at the prime rate (9.50%
   at December 31, 2000), is payable in 8 quarterly installments of $513 plus
   interest, beginning on July 1, 2000                                                    $   --            $3,076

Note payable to Wireless Sites Development, Inc. former shareholders' resulting
   from the acquisition of Wireless Sites Development Inc., (note 2). The note,
   which bears interest at 10.00% is payable in 36 monthly installments of $7
   plus interest, beginning on October 1, 2000                                            $   --            $  226
</TABLE>


                                      F-24
<PAGE>   69


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6. AFFILIATES NOTES PAYABLE - (CONTINUED)

<TABLE>
<S>                                                                                      <C>               <C>
Note payable to HAF Limited's former shareholders, resulting from the
   acquisition of HAF Limited, (note 2). The note, which bears interest
   at 9.50% is payable in 12 monthly installments of $37 plus interest
   beginning on February 1, 2002                                                         $   --            $  450
                                                                                         ------            ------

Total notes payable to affiliates                                                        $1,267            $3,752
Less current portion of notes payable to affiliates                                         500            $2,126
                                                                                         ------            ------
Long term notes payable to affiliates                                                    $  767            $1,626
                                                                                         ======            ======
</TABLE>

Required principal repayments on the affiliate notes payable are as follows:


<TABLE>
<CAPTION>
Year Ending December 31,
------------------------

<S>                             <C>
2001                            $  2,126
2002                            $  1,521
2003                            $    105
                                --------
                                $  3,752
                                ========
</TABLE>

7. OTHER LONG-TERM INDEBTEDNESS

         The Company's other long-term indebtedness at December 31, 1999 and
2000 is comprised of the following: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                            1999                  2000
                                                                          --------               -------

<S>                                                                       <C>                    <C>
Bank revolving line of credit                                             $  4,742               $ 2,925
Bank term loan                                                              10,500                    --
Senior subordinated notes, net of discount of $4,233 in 1999                 8,767                    --
Notes payable on vehicle and equipment purchases                               755                   710
                                                                          --------               -------

   Total long-term debt                                                     24,764                 3,635
Less current portion of long-term debt                                      (1,072)                 (176)
                                                                          --------               -------
   Long-term indebtedness                                                 $ 23,692               $ 3,459
                                                                          ========               =======
</TABLE>


                                      F-25

<PAGE>   70


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. OTHER LONG-TERM INDEBTEDNESS - (CONTINUED)

(A) BANK CREDIT FACILITIES

         On November 1, 1999, the Company completed a refinancing of its credit
facilities and replaced its previous $25 million facility from Fleet National
Bank (the "Fleet Facility") with a $25 million facility from Wachovia Bank N.A.
(the "Wachovia Facility"). The Fleet Facility was composed of a $10 million
revolving working capital facility and a $15 million build-to-suit facility
with interest rates based on the greater of the prime rate, the federal funds
rate, or LIBOR, plus an applicable margin ranging from 1.25% to 3.75% depending
on certain financial ratios, as defined. An extraordinary loss of $427,000 was
realized in 1999 upon extinguishment of this indebtedness.

         The Wachovia Facility was initially composed of the following: (a) a
$10.5 million term loan; (b) an $11.5 million revolving working capital
facility; and (c) a $3 million acquisition loan facility. At December 31, 1999,
$4.7 million was outstanding under the revolving working capital facility. On
July 17, 2000 the Company increased its credit facility with Wachovia by $10
million. In August, 2000, the Company repaid all amounts outstanding under its
credit facility with the proceeds from the Company's initial public offering. At
that time, the Company wrote off the remaining capitalized loan costs of $2.6
million relating to this facility. This amount was recorded as an extraordinary
item. On September 29, 2000 the Company amended its $35 million senior credit
facility with Wachovia. The new facility consists entirely of a $35 million
revolving loan facility. The maximum amount that may be borrowed under the
revolving credit facility is limited to a multiple of trailing earnings before
income taxes, depreciation and amortization (EBITDA). Accordingly the Company's
ability to borrow under this facility is contingent upon EBITDA. All loans are
payable in full on November 1, 2004. The terms of the credit agreement include
many covenants and restrictions including but not limited to those discussed
herein. Certain of the terms require the maintenance of specified levels of
profitability and debt-to-net worth and current ratios. In addition, the
covenants limit the Company's ability to sell its assets or merge with or
acquire other businesses. The covenants also limit capital expenditures and
prohibit the Company from paying dividends on its common stock or incurring
additional indebtedness. Management believes the Company is in compliance with
all outstanding financial and operational covenants. As of December 31, 2000,
the interest rate for the loan was based on LIBOR plus a margin of 1.5%. The
weighted average interest rate at December 31, 2000 was 9.5%.

(B) SENIOR SUBORDINATED NOTES

         On November 1, 1999, the company executed an agreement with American
Capital Strategies, Ltd. ("ACS") to issue up to $17.5 million in senior
subordinated convertible notes,


                                      F-26

<PAGE>   71


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. OTHER LONG-TERM INDEBTEDNESS - (CONTINUED)

designated as $13 million Tranche A notes (the "Notes") and $4.5 million
Tranche B notes. The Company issued $13 million of Tranche A notes at closing.
These senior subordinated notes were repaid in August 2000 with the proceeds of
the Company's initial public offering.

         In connection with the issuance of the Tranche A notes, ACS received
warrants to purchase 2,736,821 shares of common stock (the "Warrants") with an
exercise price of $.0038. The Warrants were valued in total at $4.3 million at
December 31 ,1999 using the Black-Scholes pricing model based on an estimated
fair value of $1.74 per common share and were recorded as a discount from the
face value of the Notes. The discount of $4.3 million was accreted as
additional interest expense totaling $94,000 in 1999 and $4.2 million in 2000,
$3.9 million of which was recorded as an extraordinary item. On September 11,
2000, in connection with the exercise of the underwriters' over-allotment
option, ACS exercised 179,646 of its warrants on a cashless basis with the
remaining 2,557,175 still outstanding at December 31, 2000. The warrants
contained fair value put features limited to a specified amount. The put
features expired upon completion of the Company's initial public offering.

(C) NOTES PAYABLE

         In addition to the credit facilities and affiliate notes payable, the
Company also has various notes payable arising from vehicle and equipment
purchases. These notes bear interest at varying rates, require monthly
installments of principal and interest, and are secured by vehicles and
equipment.

         The aggregate maturities of the Company's long-term indebtedness are
as follows: (in thousands of dollars)


<TABLE>
<CAPTION>
                                               NOTES       REVOLVING LINE
YEAR ENDING DECEMBER 31,         PAYABLE     OF CREDIT        TOTAL

<S>                              <C>         <C>           <C>
2001                              $  176      $   --         $  176
2002                                 237          --            237
2003                                 257          --            257
2004                                  38       2,925          2,963
Thereafter                             2          --              2
                                  ------      ------         ------
   Total                          $  710      $2,925         $3,635
                                  ======      ======         ======
</TABLE>


                                      F-27
<PAGE>   72


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. OTHER LONG-TERM INDEBTEDNESS - (CONTINUED)

(D) INTEREST RATE SWAP AGREEMENT

         In January, 2000 the Company entered into an interest rate swap
agreement with Wachovia Bank, N.A. and First Union Bank, to swap interest
payments from a floating rate of LIBOR to a fixed interest payment of 7.25% on
a notional principal of $12.5 million. The swap agreement terminates on January
7, 2003. The Company does not use derivative financial instruments for
trading purposes. The net amount paid or received will be
recorded as an adjustment to interest expense over the term of the agreement.
The Company's accounting policies for this instrument are based on the
Company's designation of such instrument as a hedging transaction against the
Company's debt.

         During 2000 the notional principal amount exceeded the underlying
liability and as a result the interest rate swap was recorded at market value
of ($380,000).

8. STOCKHOLDERS' EQUITY

(A) INITIAL PUBLIC OFFERING AND CONVERSION OF PREFERRED STOCK AND WARRANTS

         On August 21, 2000, the Company completed the initial public offering
of its common stock. In conjunction with the closing of that offering, the
Company issued and sold 5,798,623 shares and some of its shareholders sold
301,377 shares of common stock (excluding shares sold pursuant to the
underwriters' over-allotment option). The shares were sold by the Company at
$12.00 per share less an underwriting discount of $0.84 per share. The Company
received net proceeds (after underwriter discounts and offering expenses) of
approximately $62.7 million in cash, of which amount, approximately $31.3
million was used to repay indebtedness outstanding under the credit facility
with Wachovia Bank, N.A., $13 million to redeem senior subordinated notes held
by American Capital Strategies, Ltd., and approximately $7.9 million to redeem
the Series D preferred stock, held by Stratford Capital Partners, L.P. and
Stratford Equity Partners, L.P. In connection with the public offering, each
share of the convertible preferred stock automatically converted into
approximately 96.7 shares of common stock or an aggregate of 8,565,444 shares.
With the exception of outstanding warrants to purchase 2,557,175 shares, all of
the warrants have converted to common stock. Upon the completion of the initial
public offering, the put feature on common stock put warrants expired.

B) COMMON STOCK SPLIT

         On June 29, 2000, the Company effected a 2.65-for-one stock split of
the Company's common stock. All share and per share data in the accompanying
Consolidated Financial Statements and Notes to the Consolidated Financial
Statements have been retroactively restated to reflect the stock split.


                                      F-28
<PAGE>   73


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

9. CLASS A REDEEMABLE CONVERTIBLE PREFERRED

         On November 19, 1997, the Company issued 50,000 shares of Redeemable
Class A Convertible Preferred Stock ("Class A Stock") in a private placement for
total proceeds of $5 million. The Class A Stock accrued dividends at the rate of
$6 per share per year, payable quarterly either in cash or, at the election of
the Board of Directors in shares of Class A Stock valued at $100 per share. In
connection with the public offering each share of Class A stock automatically
converted into approximately 96.7 shares of common stock or an aggregate of
5,575,116 shares.

10. SERIES B CONVERTIBLE PREFERRED STOCK

         The Company authorized 31,000 shares of Series B Convertible Preferred
Stock ("Series B Stock") with a total value of $1,550,000 for issuance in the
purchase of Comdev on June 9, 1998.

         On June 3, 1999, the Company elected to convert the Series B Stock to
promissory notes in the principal amounts of $581,000 and $969,000, earning
interest at the prime rate per annum, payable to the two former principals of
Comdev. On November 8, 1999, the aggregated outstanding principal and interest
since issuance of the promissory notes was paid in full.

11. SERIES C REDEEMABLE CONVERTIBLE PREFERRED STOCK

         During 1999, the Company, in conjunction with DFW Capital Partners, LP
and Clear Investors, LLC, both related parties, executed a preferred stock
purchase agreement for the purpose of issuing and selling up to 75,000 shares
of Series C convertible preferred stock ("Series C Stock") to existing holders
of the Company's common and preferred stock. As of December 31, 1999, a total
of 29,607 shares at $100 each had been issued for a total consideration of $3.0
million.

         The holders of the Series C Stock were entitled to a dividend of $6
per share per annum payable quarterly in cash, or at the election of the
Company, in shares of Series C Stock. In connection with the public offering
each share of Series C Stock automatically converted into approximately
96.7 shares of common stock or an aggregate of 2,990,328 shares.


                                      F-29
<PAGE>   74


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. SERIES D SENIOR REDEEMABLE PREFERRED STOCK

         On November 1, 1999, the Company executed a securities agreement with
Stratford Capital Partners, LP and Stratford Equity Partners, LP (collectively
"Stratford Partners") to issue up to 100,000 shares of the Company's Series D
senior redeemable preferred stock ("Series D Stock"), and certain detachable
common stock warrants (the "Stratford Warrants") collectively (the
"Securities"). At closing, for a total of $7,500,000, the Company issued to
Stratford Partners 75,000 shares of the Series D Stock at $100 per share, along
with Stratford Warrants to purchase 3,953,150 common shares for a price of
$.0038 each. The Stratford Warrants were valued at $4.7 million with a
corresponding reduction to the recorded value of the Series D Stock. In
connection with the Series D stock issuance, offering costs of $303,000 were
incurred. Of the discount of $5.0 million from redemption value on the Series D
Stock, $119,000 was accreted in 1999 with the remaining $4.9 million accreted
during 2000. All of the warrants were exercised in a cashless exercise during
2000 converting into 3,951,899 common shares. The Stratford warrants and
securities contained fair value put provisions which were limited to a
specified amount and expired upon the initial public offering. The Securities
were repaid with the proceeds of the Company's initial public offering.

13. INCOME TAXES

         The Company files a consolidated income tax return with its
majority-owned subsidiaries. The components of the income tax expense (benefit)
for the three years ended December 31, 2000 are as follows: (in thousands of
dollars)


<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                                  (IN THOUSANDS)
                                    ----------------------------------------------
                                    1998               1999                  2000
                                    ----              -------               ------
       <S>                          <C>               <C>                   <C>
       Current:
            Federal                 $ --              $    --               $   --
           State                      45                   12                  161
                                    ----              -------               ------
                                      45                   12                  161
                                    ----              -------               ------
       Deferred:
           Federal                    --               (1,304)                 591
           State                      --                 (105)                 135
                                    ----              -------               ------
                                                       (1,409)                 726
                                    ----              -------               ------
                 Total              $ 45              $(1,397)              $  887
                                    ====              =======               ======
</TABLE>

         Income tax expense (benefit) is included in the Consolidated Financial
         Statements as follows: (in thousands of dollars)


                                      F-30
<PAGE>   75


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

13. INCOME TAXES - (CONTINUED)


<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                                  (IN THOUSANDS)
                                               ---------------------------------------------------
                                                 1998                  1999                 2000
                                               -------               -------               -------

           <S>                                 <C>                   <C>                   <C>
           Continuing operations               $    45               $(1,226)              $ 3,099
           Extraordinary items                      --                  (171)               (2,212)
                                               -------               -------               -------
                                                    45                (1,397)                  887
                                               -------               -------               -------
</TABLE>


         In connection with the Company's initial public offering of common
stock in August of 2000, various employees exercised their incentive stock
options and disposed of the underlying common stock of the Company prior to the
one-year stock holding period as mandated by Internal Revenue Code Section
422(a)(1). As a result, the Company measured the compensation element
associated with such disqualifying dispositions of stock and reported such
amounts to the employees as income. The resulting income tax deduction
available to the Company created a deferred income tax benefit that is properly
chargeable to Additional Paid-in Capital in accordance with Accounting
Pronouncements Bulletin No. 25. As a result of the above transaction, the
components of deferred income tax expense (benefit) for the year ended December
31, 2000 are presented below: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                                        2000
                                                                                   (IN THOUSANDS)
                                                                                -----------------------
       <S>                                                                      <C>
       Current year (increase) decrease in net deferred income tax asset               $   (878)
       Stock compensation tax benefit credit to Additional Paid-in Capital                1,604
                                                                                       --------
       Deferred income tax expense per Consolidated Statement of Operations            $    726
                                                                                       ========
</TABLE>

         A reconciliation of the expected income tax expense (benefit) on
income (loss) before extraordinary items and cumulative effect of a change in
accounting principle (based on the Federal statutory rate of 34%) to the actual
income tax expense (benefit) for the three years ended December 31, 2000 is as
follows:


                                      F-31
<PAGE>   76


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

13. INCOME TAXES - (CONTINUED)


<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                                    (IN THOUSANDS)
                                                       ---------------------------------------------
                                                        1998             1999                 2000
                                                       -----            -------              -------

<S>                                                    <C>              <C>                  <C>
Computed "expected" tax expense (benefit)               (802)              (396)              (2,705)
Nondeductible goodwill amortization                       37                114                  523
Common stock put warrant charges                          --                 --                4,651
Other nondeductible items                                 23                104                  389
State income taxes, net of Federal benefit              (122)               (61)                 241
Change in valuation allowance                            942               (942)                  --
Other, net                                               (33)               (45)                  --
                                                       -----            -------              -------

Provision (benefit) for income taxes                   $  45            $(1,226)             $ 3,099
                                                       =====            =======              =======
</TABLE>

         The income tax effect of temporary differences that give rise to
significant portions of the Company's deferred income tax assets and
liabilities at December 31, 1999 and 2000 is presented below: (in thousands of
dollars)


<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                          (IN THOUSANDS)
                                                                       -------------------
                                                                         1999        2000
                                                                       --------     ------
   <S>                                                                 <C>          <C>
   Deferred income tax assets:
        Net operating loss carry-forwards                                 1,296      1,985
        Allowance for doubtful accounts                                     368         79
        Amortization of goodwill                                            244        400
        Other, net                                                          145        417
                                                                       --------     ------
             Total gross deferred income tax asset                        2,053      2,881
        Less:  valuation allowance                                           --         --
                                                                       --------     ------
             Deferred income tax assets                                   2,053      2,881
   Deferred income tax liabilities:
        Differences in the book and tax bases                              (311)       (86)
          of                 depreciable assets
        Deferred compensation                                                --       (175)
                                                                       --------     ------
   Net deferred income tax assets                                      $  1,742     $2,620
                                                                       ========     ======
</TABLE>

The valuation allowance for deferred income tax assets as of December 31, 1998,
1999 and 2000 was $0, $0 and $942,000, respectively. The net change in the
total valuation allowance for the years ended December 31, 1998, 1999 and 2000
was an increase (decrease) of $0, ($942,000) and $942,000, respectively. In
assessing the realizability of deferred income tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
income tax assets will not be recognized. The ultimate realization of deferred
income


                                      F-32
<PAGE>   77


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

13. INCOME TAXES - (CONTINUED)

tax assets is dependent upon the generation of future table income during the
periods in which the temporary differences become deductible. Management
considers the scheduled reversal of deferred income tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment.
Based on these criteria, management believes it is more likely than not that all
net deferred income tax assets as of December 31, 2000 will be realized.

         At December 31, 2000, the Company has net operating loss carryforwards
for U.S. Federal income tax purposes of approximately $5.2 million that are
available to offset future taxable income, if any, through 2020. Approximately
$1.5 million of the net operating loss carryforwards that the Company may use to
offset taxable income in future years is limited as a result of ownership
changes, as defined under Internal Revenue Code Section 382 ("Section 382"),
which occurred with the Company's sale of Series C Preferred Stock in August of
1999 and again with the Company's initial public offering of stock in August of
2000. Based on the calculated value of the Company immediately preceding these
changes, it is anticipated that all of the net operating losses generated
through December 31, 2000 will be available for carryforward and use against
future taxable income in the year ended December 31, 2001, assuming no further
ownership changes.

14. COMMITMENTS AND CONTINGENCIES

A) LEASES

         During December 1999, the Company entered into an agreement with a
member of senior management for the rental of its Northeast regional office.
The lease is classified as an operating lease and provides for minimum annual
rentals of $129,000 through 2004, with an option for annual extensions. Lease
expense incurred in 1999 under this agreement was approximately $11,000 and for
2000 was approximately $135,000.

         In November 1999, the Company entered into an agreement with the
former owner of an acquired subsidiary for the rental of its Southwest regional
office. The lease is classified as an operating lease and provides for annual
rentals of up to $192,000 through 2002, with an option for annual extensions.
Lease expense incurred in 1999 under this agreement was approximately $14,000
and in 2000 was approximately $154,000.

         In February 1998, the Company entered into an agreement with a
principal stockholder for the rental of its corporate headquarters. The lease
is classified as an operating lease and provides for annual rentals of
approximately $182,000 through May 2003. The lease allows for cancellation
after three years with 180 days' notification. Lease expense was approximately
$137,000, $182,000 and $167,000 in 1998, 1999 and 2000, respectively.


                                      F-33
<PAGE>   78


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

         During 1999, the Company rented its Central regional office from a
principal stockholder for the period January 1, 1999 to March 1, 1999 and
incurred approximately $30,000 of lease expense under the agreement. On March
1, 1999, the Company purchased the office for $325,000 and terminated the
rental agreement.

         The Company also purchased approximately $300,000 of equipment from an
affiliated company of the majority stockholder during 1999.

         In addition, the Company has commitments with unrelated parties under
operating leases, principally for office space, warehouse space, and equipment.
These unrelated lease agreements generally cover a period of one to five years.

         Management believes the terms of the above transactions with related
parties are comparable to similar transactions among unrelated parties.

         The following summarizes the approximate future minimum lease payments
under all non-cancelable related and unrelated operating lease agreements: (in
thousands of dollars)


<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,

<S>                       <C>
2001                      $2,462
2002                       1,887
2003                         777
2004                         388
2005                          87
                          ------
          Total           $5,601
                          ======
</TABLE>

         Total lease expense for 1998, 1999 and 2000 approximated $407,000,
$809,000 and $2.2 million, respectively.

B) LEGAL MATTERS

         In the normal course of business, the Company is subject to certain
administrative proceedings and litigation. The following is a brief summary of
two proceedings currently pending.

         On November 20, 1997, the Company agreed to issue warrants to purchase
298,562 shares of the Company's common stock to a corporation in consideration
for services rendered in connection with the issuance of the Company's Class A
Preferred Stock. Each warrant enables the holder to purchase one share of
common stock for $1.81. The warrants were to expire five years from


                                      F-34
<PAGE>   79


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

the issuance date. The estimated value of the warrants was $20,652 and was
included in the issuance costs of the Class A Stock. As of December 31, 2000,
the Company believes it has fulfilled its obligation to the aforementioned
corporation and does not expect to issue these warrants. The corporation is
disputing this position and the Company expects this matter will be resolved
through arbitration.

         On November 7, 2000, a suit was filed against the Company and two
officers of the Company, asserting that the defendants engaged in a conspiracy
to pursue frivolous litigation against the plaintiff, to threaten further
litigation and to interfere with the business relations of the plaintiff. The
Complaint was later amended to reflect that the plaintiff had lost by jury
verdict the litigation and to seek a declaratory judgement that claims by the
Company and its executives to be reimbursed for legal fees expended in
connection with that suit are without merit.

         In management's opinion, the outcome of the foregoing proceedings will
not materially affect the financial position and results of operations of the
Company.

15. STOCK OPTIONS

         Pursuant to an employment agreement with an officer, 203,103 stock
options were granted on July 24, 1997 with an exercise price of $.000000928 per
share. These options were exercised in April, 2000.

         The Company's 1998 Stock Option Plan (the "Plan") was adopted by the
Board of Directors on July 10, 1998. The Plan was subsequently amended and
restated on May 25, 2000. Under the Plan, the Company can grant incentive and
nonqualified options to directors, officers, and employees. The Company also
increased the number of shares authorized for issuance under the Plan to
1,511,825. During 2000, the Company increased the number of shares of common
stock authorized for issuance under the Plan to 2.65 million. The exercise
price of options granted under the Plan may not be less than 100% of the fair
market value of the common stock


                                      F-35
<PAGE>   80


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

15. STOCK OPTIONS - (CONTINUED)

on the grant date. For qualified incentive stock options granted to a Ten
Percent Owner, the purchase price shall not be less than 110% of the fair
market value of the common stock on the grant date. Options granted under the
Plan have a vesting period of up to five years and expire five years after
vesting, or earlier under certain conditions. As of December 31, 2000,
2,072,009 options were outstanding under the Plan.

         At various dates in June and July 1999, the Company repriced 791,595
options from exercise prices of $1.89 and $2.49 to $1.14 per share. All of
these options were exercised prior to August 16, 2000.

         During 1999, 389,706 stock options previously granted to a former
officer of the Company in conjunction with an employment agreement were
forfeited and retired upon the resignation of the officer from the Company.

         Stock option activity, including options granted to officers outside
of the Plan, for the years ended December 31, 1998, 1999, and 2000 is as
follows:


<TABLE>
<CAPTION>
                                                                          APPROXIMATE
                                                       NUMBER          WEIGHTED-AVERAGE
                                                     OF SHARES          EXERCISE PRICE
                                                     ----------        ----------------

<S>                                                  <C>               <C>
Outstanding at December 31, 1997                     1,251,242             $ 0.60
Granted                                                292,163               1.14
Forfeited                                             (90,100)               1.14
                                                      --------               ----
Outstanding at December 31, 1998                     1,453,305               0.68

Granted                                                654,550               1.55
Forfeited                                            (484,576)               0.23
Exercised                                                (530)               1.14
                                                      --------               ----
Outstanding at December 31, 1999                     1,622,749               1.16

Granted                                              1,591,616               8.12
Forfeited                                             (126,992)              5.97
Exercised                                           (1,015,364)              0.91
                                                    ----------               ----

Outstanding at December 31, 2000                     2,072,009             $ 6.35
                                                     =========             ======
</TABLE>


                                      F-36
<PAGE>   81


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

15. STOCK OPTIONS - (CONTINUED)

            The following table summarizes information concerning stock options
outstanding as of December 31, 2000:


<TABLE>
<CAPTION>
                                                                    APPROXIMATE
                                                 WEIGHTED-            WEIGHTED-      EXERCISABLE       WEIGHTED-
                         RANGE OF          AVERAGE CONTRACTUAL         AVERAGE          AS OF          AVERAGE
  SHARES           APPROXIMATE EXERCISE      REMAINING LIFE           EXERCISE       DECEMBER 31,      EXERCISE
OUTSTANDING              PRICES                (IN YEARS)              PRICE            2000            PRICE
-----------        --------------------    -------------------      -----------      ------------      --------

<S>                <C>                     <C>                      <C>              <C>               <C>
   699,335          $  1.14 - 2.12                8.5                  $ 1.67          131,175          $ 1.55
   189,474             3.40 - 3.74                9.3                    3.48           42,896            3.50
   605,800            6.10 - 11.51                9.8                    6.53               --              --
   577,400           12.00 - 21.56                9.5                   12.76           37,292           12.03
 ---------          --------------                ---                  ------          -------          ------
 2,072,009          $ 1.14 - 21.56                9.2                  $ 6.35          211,363          $ 3.79
 =========          ==============                ===                  ======          =======          ======
</TABLE>

         Disclosures of pro forma net income (loss) and earnings (loss) per
share is required by SFAS No. 123, and has been determined as if the Company
had accounted for its employee stock option grants under the fair value value
method of that statement. The fair value for stock options granted was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions:


<TABLE>
<CAPTION>
                                                                                          YEARS ENDED DECEMBER 31,
                                                                                        ----------------------------
                                                                                        1998        1999        2000
                                                                                        ----        ----        ----
<S>                                                                                    <C>         <C>         <C>
Risk free interest rate...................................................              5.17%       6.33        9.5%
Volatility....................................................................             0           0        120%
Dividend Yield................................................................             0           0          0
Expected life in years................................                                 5 years     5 years     5 years
</TABLE>

         For purposes of pro forma disclosures, the estimated fair value of the
option is amortized to expense over the options' vesting period, which includes
actual vesting entitlements during the year. The weighted-average fair value of
options granted during 1998, 1999 and 2000 was $0.15, $0.27 and $6.75,
respectively.

         The Company's pro forma net loss and loss per share using the fair
value based method of accounting of SFAS No. 123 is as follows: (in thousands
of dollars)


                                      F-37
<PAGE>   82


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

15. STOCK OPTIONS - (CONTINUED)


<TABLE>
<CAPTION>
                                                                                 YEARS ENDED DECEMBER 31,
                                                                               ----------------------------
                                                                               1998        1999        2000
                                                                               ----        ----        ----
<S>                                                                         <C>          <C>        <C>
Pro forma net loss                                                          $ (2,511)    $  (505)    16,822
Pro forma basic and diluted loss per share applicable to
common stockholders                                                            (0.41)      (0.16)     (1.54)
</TABLE>

         The effect on net loss and loss per share may not be indicative of the
effects in future years as options vest over several years and the Company
continues to grant stock options to new employees.

16. WARRANTS

         During 1999, the Company issued warrants to purchase 200,652 shares of
common stock to each of its largest stockholder and the holder of its Class A
Stock. The warrants were issued in exchange for collateral provided by these
stockholders relating to the Company's then outstanding credit facility. Each
warrant enabled the holder to purchase one share of common stock for $.0038.
The value of the warrants was recorded as additional interest expense. The
estimated value of the warrants was $415,000 based on an estimated fair value
of $1.0344 per common share at the date of issuance. All of these warrants were
exercised during 2000 and converted to 401,225 shares of common stock.

         See Note 7 for additional warrants issued and outstanding as of
December 31, 2000.

17. SEGMENT AND CUSTOMER INFORMATION

         The Company operates and manages its business as a single segment. The
Company provides comprehensive integrated network solutions to service
providers in the wireless telecommunications industry.

         The following is a summary of revenues by geographic area. Revenue
from external customers is based on selling location: (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                UNITED
                                                                STATES           OTHER         CONSOLIDATED
                                                                ------           -----         ------------

<S>                                                             <C>             <C>              <C>
Year ended December 31, 1998                                    $ 24,485       $    --           $ 24,485
Year ended December 31, 1999                                    $ 47,794       $   837           $ 48,631
Year ended December 31, 2000                                    $136,202       $ 4,164           $ 140,366
</TABLE>


                                      F-38
<PAGE>   83


                           O2WIRELESS SOLUTIONS INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

17. SEGMENT AND CUSTOMER INFORMATION - (CONTINUED)

         For the year ended December 31, 1998, revenues from one unaffiliated
customer totaled approximately 10% of revenues. For the year ended December 31,
1999, revenues from three unaffiliated customers totaled approximately 36% of
revenues. For the year ended December 31, 2000, revenues from two customers
totaled approximately 30% of revenues. There were no other unaffiliated
individual customers that accounted for more than 10% of total revenues in
1998, 1999 or 2000.

         On February 9, 2001, the Company obtained a Promissory Note from South
Carolina Phone, LLC for the sum of approximately $6.1 million, to cover payment
for goods and services provided by the Company to the issuer during 2000.
Interest shall be payable on the Note from January 1, 2001 until paid, at a
rate of 9.5%. The principal sum of the Note, and all accrued, but unpaid
interest thereon shall by due and payable on November 6, 2001, 270 days after
the Note date, or earlier subject to certain transactions. The above amount of
approximately $6.1 million was included as part of the Company's Contract
Revenues Receivable at December 31, 2000.

18. SUBSEQUENT EVENTS

         On January 2, 2001, the Company acquired all of the issued and
outstanding common stock of Young & Associates, Inc., for a purchase price of
approximately $9.7 million in cash and 314,044 shares of the Company's common
stock. The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations were recorded from the
date of acquisition.

         During the first quarter of 2001 the Company continued to assess its
cost and organizational structure. The Company is realigning its business units
and streamlining its cost structure to achieve profitability. As a result of the
realignment the Company may incur charges in the first quarter of 2001.


                                      F-39
<PAGE>   84
                          Independent Auditors' Report



The Board of Directors
o2wireless Solutions, Inc.

Under date of March 30, 2001, we reported on the consolidated balance sheets of
o2wireless Solutions, Inc. and subsidiaries (the "Company") as of December 31,
1999 and 2000, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 2000. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
financial statement schedule in the annual report on Form 10-K, as listed in the
index under Item 14. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

/s/ KPMG LLP

Atlanta, Georgia
March 30, 2001




                                      S-1



<PAGE>   85
          Schedule II - Consolidated Valuation and Qualifying Accounts

                  O2 WIRELESS SOLUTIONS, INC. AND SUBSIDIARIES

                 CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               ADDITIONS
                                                       BALANCE AT    CHARGED TO                   BALANCE
                                                      BEGINNING OF    COSTS AND                   AT END OF
                                                         PERIOD       EXPENSES       DEDUCTIONS    PERIOD
Year Ended                                            ------------   ----------      ----------   ---------
----------
<S>                 <C>                               <C>            <C>             <C>          <C>


December 31, 1998
                    Allowance for Doubtful Accounts       $  --           106             --         106

                    Income Tax Valuation Allowance           --           942             --         942

December 31, 1999
                    Allowance for Doubtful Accounts       $ 106           766             --         872

                    Income Tax Valuation Allowance          942            --           (942)         --

December 31, 2000
                    Allowance for Doubtful Accounts        $872           615           (675)        812

                    Income Tax Valuation Allowance           --            --             --          --
</TABLE>


                                      S-2





<PAGE>   86


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBIT
------            ----------------------
<S>     <C>       <C>

3.1      -        Second Amended and Restated Articles of Incorporation of
                  o2wireless Solutions filed and effective August 18, 2000.

3.2      -        Amended and Restated Bylaws of o2wireless Solutions effective
                  as of August 15, 2000.

21.1     -        List of Subsidiaries.

23.1     -        Consent of KPMG LLP.
</TABLE>